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US: Tyson hurting after analyst”s take on Price-Fixing allegations

By  |  October 9, 2016

Tyson, Pilgrim’s Pride, and Sanderson Farms all took a dive on Friday, driven solely by a report by the small Wall Street equity research shop Pivotal Research. Hundreds of millions in market value has been wiped out for these companies, all based on one analyst’s conclusion that a lawsuit regarding industry collusion on chicken prices; a lawsuit most investors have known about for more than a month now.

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    Tyson is obviously remaining tight-lipped regarding pending litigation, but it still took the time to issue a press release calling the report “speculative” and that the company had not changed business practices based on the litigation, a claim that was made in the report.

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    The lawsuit is simple in its claim. Brought forth by Maplevale Farms, a large food service provider. It alleges that major players in the poultry industry worked in concert to cut production, colluding to manage broiler supply and keep prices inflated by exchanging proprietary data through a service called Agri Stats. Basically, a chicken cartel. By sharing proprietary information (via Agri Stats) and discussion between senior management, the industry kept chicken prices high.

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