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Tyson to Pay $221.5M to Settle Chicken-Price-Fixing Charges

Tyson Foods shares rose after the No. 1 U.S. meat producer said it would pay $221.5 million to settle price-fixing accusations.
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Tyson Foods  (TSN) - Get Tyson Foods Inc. Report shares rose on Wednesday after the country’s biggest meat company said it would pay $221.5 million to settle price-fixing accusations.

Earlier this month, Tyson Foods and Pilgrim’s Pride  (PPC) - Get Pilgrim's Pride Corporation Report, the second largest U.S. poultry company, said they had settled the collusion charges. The plaintiffs included restaurant chains, supermarket operators and food distributors.

"The payment will be reflected in the company’s first-quarter 2021 financial statements, in settlement of all outstanding claims brought by the classes,” Tyson said.

“While the Company does not admit any liability as part of the settlements, it believes that the settlements were in the best interests of the company and its shareholders to avoid the uncertainty, risk, expense and distraction of protracted litigation.”

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The plaintiffs alleged that Tyson Foods and other major chicken producers cooperated on output and pricing. Tyson and the others said prices simply reflect supply and demand. Tyson didn’t disclose how much it paid in those settlements.

Tyson Foods recently traded at $64.45, up 0.9%. The shares have slumped 27% over the past 12 months.

As for Wednesday’s announcement from Tyson, “it reached agreement to settle all class claims related to the previously disclosed litigation,” the company said in a statement. Settlements were reached with purchasers, commercial and institutional indirect purchasers and end users.

Morningstar analyst Rebecca Scheuneman puts fair value at $86. “We estimate that Tyson will ultimately pay $350 million-$400 million in [chicken-pricing] settlements, which is not material enough to alter our $86 fair value estimate,” she wrote in October.