The largest poultry company on the West Coast is under new management.
On June 7, 2022, private equity firm Atlas Holdings purchased Foster Farms. Terms of the acquisition were not disclosed.
According to WATT Global Media’s Top Broiler Companies rankings, Foster Farms is the 12th largest integrated chicken company in the U.S. in terms of ready-to-cook (RTC) chicken produced on a weekly basis and the 14th largest integrated turkey company in terms of total pounds processed annually.
Atlas Holdings, based in Greenwich, Connecticut, is an investment group with a portfolio of 25 companies worldwide generating $14.5 billion in revenue annually. It named Donnie Smith as the new Chief Executive Officer and Chairman of the Board of Foster Farms.
Donnie Smith
Smith previously led Tyson Foods Inc., the largest integrated chicken company in the U.S. and fifth largest integrated turkey company, as its CEO from 2009 to 2016. Smith’s 2016 exit from Tyson included a three-year agreement to remain as a consultant until 2019, according to Tyson Foods Inc.’s U.S. Securities and Exchange Commission filings.
Donnie Smith, Foster Farms
(Courtesy Atlas Holdings)
Atlas said it was pleased Smith agreed to the role with Foster Farms. Smith worked at Tyson at all levels and presided over a prosperous period for the company.
“Under his leadership as CEO, Tyson saw record growth, entered new markets and expanded its product offerings,” Atlas said.
Atlas Holdings
Atlas Holdings, founded in 2002, according to its website, “focuses on control investments in companies experiencing financial or operational stress.” It manages a portfolio of companies earning more than $14.5 billion annually.
Atlas is “an active acquirer of underperforming or discontinued operations from corporate sellers and has acquired businesses through bankruptcy purchases, out-of-court restructurings and reorganizations,” its site says. “Atlas will continue to pursue these strategies, with a particular focus on industrial sectors in which it has substantial operating experience.”
In a statement to WATT PoultryUSA, Atlas said its optimistic about Foster Farms’ future.
Its goal in purchasing Foster Farms, it said, is to leverage Foster Farms’ foundation and Atlas’ experience and leadership team “to create a consistently high-performing business.”
It said Foster Farms currently employs more than 10,000 and its annual revenue is about $3 billion.
Atlas’ investment portfolio includes companies in the automotive, building materials, business solutions, business and industrial services, engineered products, packaging, power generation, pulp and paper and metals industries as well as the food industry. It also owns Wizard Nuts, a manufacturer and distributor of private label healthy snacks in the U.S.
Its purchase of Foster Farms, it said, is a major expansion of its participation in the food industry. It plans on leading the company into its next era as a “stable, sustainable and thriving businesses.”
Operationally, Atlas said, the live production and processing operations will not be affected by the transaction, nor will the poultry growers.
“We have no plans to change the workforce,” it said in a statement. “Rather, we look forward to working with the existing team across all locations to strengthen and grow the company.”
Mark Jordan, a poultry economist and executive director of LEAP Market Analytics, said such acquisitions could be part of a burgeoning trend.
"Large, diversified private investment groups will continue exploring opportunities to get a foothold in the poultry production space," Jordan said. "From outside the industry, the profit potential is alluring based on recent performance, and from within the industry, outsourcing risk and the inevitable return of negative market forces to an entity better insulated to those risks is also attractive."
(Courtesy LEAP Market Analytics)
Foster Farms
Foster Farms, founded in 1939, is a family-owned chicken and turkey company based in Livingston, California, with operations in California, Oregon, Washington, Colorado, Arkansas, Alabama and Louisiana.
According to WATT Global Media data, Foster Farms’ broiler production was steady from 2017 through 2020 and grew along with the industry. In 2017, it produced 21.1 million pounds of RTC chicken on a weekly basis. By 2020, that figure grew 28.02 million pounds. However, production dropped to 23 million pounds in 2021.
Turkey production followed a similar trend and declined with the industry. In 2017, Foster Farms slaughtered 218.7 million pounds of live turkeys. By 2020, that figured declined to 213 million pounds. In 2021, it fell to 159 million pounds.
In its response to the annual WATT Top Broiler Companies survey in 2021, the company reported annual sales of $2.03 billion for chicken and $278 million for turkey.
In the same survey, Foster Farms said, more than 70% of broiler and turkey sales were retail.
Changes at Foster Farms
Foster Farms’ past decade featured executive changes, investments and, until the last year, steadily rising production.
Foster Farms, to boost its brand, sponsored the San Francisco Bay area college football post season bowl game from 2014 to 2017 at the Levi’s Stadium in Santa Clara, California.
In August 2016, Ron Foster, the grandson of founders Max and Verda Foster, stepped down as the company’s CEO and president. The company’s board of directors picked Laura Flanagan, previously the president of ConAgra Foods’ Snacks Division, as the next president and CEO.
In 2016, the company announced plans to build a new, $15.8 million organic feed mill in Tulare County, California. In 2017, it announced a $30 million capital expenditure to expand and improve its facility in Farmerville, Louisiana. In 2019, it announced plans to expand and upgrade another facility in Livingston, California.
In February 2019, Flanagan resigned. Foster Farms’ board named Dan Huber, the chief operating officer at the time, as the president and CEO in the same month.
In October 2019, Foster Farms placed the winning bid of $31 million to acquire 19 farms in California formerly owned by Zacky Farms, which went out of business in 2018. It applied permits to begin poultry operations, placing chickens and turkeys, at those farms in June 2021.
Foster Farms has also been named in numerous lawsuits involving the poultry industry since 2015.
Most notably, in 2018, it was ordered by a federal judge to pay $1.95 million in damages for a child who suffered a brain injury due to a Salmonella Heidelberg infection from consuming chicken traced back to Foster Farms. A jury in that case attributed 30% of the fault to Foster Farms and 70% to family members for their preparation of the chicken.
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