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Chains like McDonald’s, Yum Brand’s KFC, Burger King and Starbucks SBUX +1.46% have admitted to using expired meat from Shanghai Husi Food following an investigation by Shanghai authorities. Shanghai Husi managers said they were “appalled.” “Our company management believes this to be an isolated event, but takes full responsibility for the situation and will take appropriate actions swiftly and comprehensively,” the company said a press release.
Shanghai Husi’s corporate parent is far from China. It’s the $5.7 billion (sales) OSI Group , a meat processor headquartered in Aurora, Illinois. OSI has long appeared on FORBES’ list of the Largest Private Companies in America.
OSI is entirely owned by Lavin (an OSI spokeswoman confirms this and the revenue figure). His sole stake in the massive company raises an inevitable question: Is he a billionaire?
Not with the value of his company clouded by the concerns in China. Let’s examine the price-to-sales multiples of similar publicly traded meat-processing companies. They range from roughly 0.2 times (for Tyson) to upward of 0.9 times sales (for Pilgrim’s Pride). Until the Chinese scandal clears up, there seems little guarantee that OSI could fetch the same valuation as those brand-name companies. Certainly if OSI was merely sold for parts, it would make Lavin a very wealthy man. But for now, Lavin won’t be appearing on either the Forbes 400 or the World’s Billionaire rankings. The OSI spokeswoman couldn’t be reach to comment on the valuation or the food problems.
For man with a big company, Lavin has kept a small profile. According to trade publication Independent Processor, Lavin was working as a consultant in 1970 when a 61-year-old company called Otto & Sons asked him to help arrange financing. They wanted the capital to build a meat-processing plant and become McDonald’s Midwest supplier. He got the meat guys their money and continued to work for them. When the family changed its management in the late 1970s—a father bowed out to make way for his sons and an expansion overseas—Lavin joined full time. It was Lavin who pushed Otto & Sons (soon to become OSI) into foreign markets.
OSI today operates in 17 countries and sells its products in 85 nations. Its food could be set on the kitchen table at any time—with OSI producing bacon, breakfast sausage, hot dogs, cooked beef and pork, chicken, pizza and breadsticks.
China does seem to be a country of recent focus. OSI has invested more than $750 million in building factories there (its ninth and tenth opened last October) in an effort to become vertically integrated. OSI’s expansion gave it the ability to process more than 300 million chickens each year. Another $100 million is going toward the construction of two more factories, one in Shandong Province (to produce what OSI calls “specialty products”) and one in Henan, to handle even more chicken.
