SPRINGDALE, Ark. – Tyson Foods is disputing conclusions made by a market research firm that downgraded the poultry processor’s shares based on an antitrust lawsuit filed against the company in September.
Pivotal Research Group LLC, an equity research firm in New York, lowered the price target for Tyson shares to $40 from $100, according to news reports. The downgrade caused Tyson shares to fall 10 percent by 12:15 p.m. ET, according to NYSE.com. Other processors also were affected by the news. Pilgrim’s Pride shares retreated 5.05 percent by 12:18, while Sanderson Farms shares declined by 5.37 percent at 12:19.
Pivotal based its decision in part on an antitrust lawsuit filed against Tyson Foods, Koch Foods, Perdue Farms and several other major poultry processors. The lawsuit, which was filed by food distributor Maplevale Farms, alleges that the defendants named in the complaint conspired as early as January 2008 to “fix, raise, maintain, and stabilize the price of Broilers…”
The lawsuit alleges that “…The principal (but not exclusive) method by which Defendants implemented and executed their conspiracy was by coordinating their output and limiting production with the intent and expected result of increasing prices of Broilers in the United States. In furtherance of their conspiracy, Defendants exchanged detailed, competitively sensitive, and closely-guarded non-public information about prices, capacity, sales volume, and demand, including through third party co-conspirator Agri Stats.”
In a market research report advising investors, Pivotal said the lawsuit was “…powerfully convincing…”
“The mechanism for collusion is not a shady meeting in a hotel room, as was once done by players in the lysine market,” Pivotal said. “Rather, the complaint alleges supply collusion occurred through non-public data exchange; detailed industry reports compiled on a daily or weekly basis by Agri Stats, Inc., a subsidiary of Eli Lilly and Co., and then sold back to industry participants.”
But in a statement, Tyson Foods said “While we don’t normally make substantive comments regarding pending litigation, we dispute the allegations in the complaints as well as the speculative conclusions reached by the analyst, and we will defend ourselves in court.
“Contrary to what the analyst assumed, we have not made any changes to our business practices in response to the complaints.”
The case is Maplevale Farms Inc. v. Koch Foods Inc. et al, case number 1:16-cv-08637, in the U.S. District Court for the Northern District of Illinois.