» 2001

Animal Health News & Notes for January 19, 2001 1/19/2001

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Brakke Consulting’s
Animal Health News & Notes for January 19, 2001
Copyright © Brakke Consulting, Inc.
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Company Earnings Releases

> Cargill reported $174 million in earnings for the second quarter ended Nov. 30, up 20% from the same period a year ago. That brought earnings for the first six months of fiscal 2001 to $346 million, a 17% increase from last year's first half.  Second-quarter results continued to be led by Cargill's beef processing business, and by its financial businesses, which delivered a balanced performance across geographies.  Also highlighted was the company's December acquisition agreement with Agribrands International, the maker and marketer outside the United States of Purina, Chow and other quality animal nutrition products. (AgWeb)

>  ABAXIS, Inc. reported record revenues for its third fiscal quarter and the nine-months ended December 31, 2000. For the third fiscal quarter, revenues increased 16% to $7.6 million compared with revenues for the same quarter last year.  The Company reported a net loss of $561,000 compared to net income of $172,000 for the same quarter last year. The Company incurred one-time charges of approximately $1,033,000 and a non-recurring non-cash dividend of $1,418,000. Revenues for the nine-month period increased 38% to $22.0 million compared with revenues for the same period last year.  The Company reported net income of $342,000 compared to a net loss of $952,000 for the same period last year. (PRNewswire)

>  Internet-based livestock marketer CattleSale.com reported record sales in December and 2000 gross revenues of $62.5 million. December was CattleSale.com's best month to date, with online sales of over 14,000 head of cattle for a gross value in excess of $8.8 million. This surpassed CattleSale.com's 2000 monthly sales average by 53%. CattleSale.com recorded exclusive online sales in excess of 119,000 cattle in the year 2000. Since the inception of its daily online marketing format in August 1999, CattleSale.com has sold more than 143,000 head of cattle with a gross contract value of $82.8 million. CattleSale.com's daily cattle listings average between 12,000 and 15,000 head per week. (AgWeb)

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The North American Veterinary Conference – Orlando, Florida

The 18th North American Veterinary Conference (NAVC) concluded this Thursday in Orlando, Florida.   One of the world's largest veterinary gatherings, the NAVC is also one of the largest gatherings of animal health industry personnel.  Last year, Brakke Consulting's time was consumed in discussions about all the dotcom's entering the animal health business.  This year, all seven of our consultants attending the meeting were kept busy meeting with many companies and senior executives.   Most of these discussions involved more of the "normal challenges" we assist our clients with: executive search and placement, strategic planning, technology assessment, acquisitions, and market studies. 

We presented the 2001 Animal Health Industry Overview twice on Monday to packed rooms.   If you did not have the opportunity to attend the Overview at NAVC, we will present it again at the Western States Veterinary Conference on Tuesday, February 13, 2001.  You can register online for the Western presentation by clicking the link located at the bottom of our website home page at www.brakkeconsulting.com.  We look forward to seeing those of you we missed in Orlando in Las Vegas. 

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Company News Releases

>  Nestle SA, whose products include the Friskies and Alpo pet food brands, announced an agreement to acquire Ralston Purina Co. for $10.3 billion in cash.  Nestle is offering $33.50 for each share of Ralston, 36% above the St. Louis-based company's closing stock price Friday of $24.63 on the NYSE. The agreement will likely receive antitrust scrutiny and the companies could be required to trim their pet food businesses in order to gain regulatory approval. (AP)

>  Heska announced the recent issuance of six patents by the US Patent and Trademark Office.  All of the patents relate to molecules that are targets for use in the development of flea control vaccines and flea control pharmaceuticals.  Heska now holds 105 issued US patents and 127 pending US patent applications.  The Company also maintains a corresponding foreign patent portfolio.  (company press release)

>  Ceva Sante Animale announced a final agreement with Provimi Holding for the acquisition of its Italian veterinary subsidiary Centralvet, subject only to Italian antitrust approval.  Ceva was created in January 2000 following the leveraged management buyout of Sanofi's animal health unit.  This acquisition follows that of Anchorpharm in South Africa in October 2000.  (company press release)

>  Agricultural giant Cargill Inc. has created a new division, Feed Applications, to market specialty feed ingredients such as enzymes, organic acids and direct-fed microbials to swine and poultry farmers and to feed mills worldwide. The division is expected to complement Cargill's
existing businesses, which include a leading role in world feed grain exports, and its recent acquisitions.  In December, Cargill announced it would buy St. Louis-based Agribrands for $541
million in a deal that will create one of the world's biggest livestock feed manufacturers. (AnimalNet - Reuters)

>  Schneider Corp. announced it sold its fresh pork operations in Winnipeg to Maple Leaf Foods. The $44-million acquisition involves a slaughter facility that processes 18,000 hogs a week and a cutting plant which produces those hogs plus another 14,000 per week from other facilities. As part of the transaction, Schneider will purchase Maple Leaf¹s interest in National Meats Inc, a joint venture between the two meat producers. Both transactions are subject to regulatory approval. (AnimalNet – CBC News)

>  Screwworm flies can now be identified using a new diagnostic field kit developed by Agricultural Research Service scientists. Using the kit reduces, , the time it takes to differentiate screwworm fly maggots from similar fly species from several days to a few hours.  With the new test kit in hand, a veterinary officer could confirm a suspected screwworm's identity in six hours rather than ship it to a lab for visual examination.  The kit, 99.9% accurate, turns blue when a specimen is a screwworm. Agdia, Inc. is collaborating with ARS to commercialize the technology.   A commercial test kit could be available within two years. (AnimalNet - USDA ARS News Service)

>  Harcourt General, Inc. announced it has signed a content licensing and distribution agreement with PetPlace.com to offer Harcourt Health Sciences product information via the PetPlace.com consumer website. The agreement between Harcourt and PetPlace.com will allow PetPlace.com to offer over the Internet for the first time, material from the vast veterinary health science resources of Harcourt's W. B. Saunders, Mosby, and Churchill Livingstone divisions in an intelligent, readily searchable format for pet owners. This latest move by PetPlace.com comes on the heels of the recently launched PetPlace.com Drug Reference Library. (Business Wire)
 
>  The National Consortium on Veterinary Economic Issues (NVCEI) announced its selection of Howard E. Rubin as its Chief Executive Officer.  Mr. Rubin, a certified public accountant, first entered the veterinary world as US CFO of Ashcroft Rubin Inc. and director of GeneLink Australia and Anilink, the US division of an Australian veterinary products firm.  Mr. Rubin led a leveraged buyout of Cardiopet Inc. in 1988, which subsequently became the largest provider of telemedical services in the animal health industry.  Rubin sold Cardiopet to IDEXX in 1995, and remained on as president of Cardiopet and VP of IDEXX. The mission of the NCVEI, which was jointly founded by the AVMA, AAHA, and AAVMC, is to improve the economic base of the veterinary profession, ensuring that the delivery of veterinary care and service meets the needs of society. (press release)

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  BRAKKE CONSULTING, INC.
       Mergers, Acquisitions & Divestitures

  >  Are you interested in growing your business by purchasing another company, product line or technology?

  >  Have you been thinking about selling your company, product line or technology?

  >  Have you considered merging your company with another firm to improve shareholder value?

In 2000, Brakke Consulting handled a dozen projects related to acquisitions or divestitures.  We were the sales Agent of Record for the December sale of Megan Health to Avant Immunotherapeutics.  We assisted with valuations and due diligence on three confidential transactions, and provided executive counsel on several other potential transactions.

Brakke Consulting has the experience, insight, abilities, and contacts that provide our clients with the highest quality services in the animal health, pet, veterinary, and specialty chemicals markets.  Please contact any of our offices for a confidential consultation on our range of services.  Contact information for all offices are available on our website at www.brakkeconsulting.com and click on a starred location on the world map.

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Animal Health News

>  The USDA's Agricultural Marketing Service announced that not enough valid petitions were received to require a referendum on the beef checkoff. The Beef Promotion and Research Act provides for a referendum if requested by 10% of all cattle producers in the United States. USDA determined this number to be 107,883 producers. Although the Livestock Marketing Association submitted 127,927 petitions to USDA, PriceWaterhouseCoopers estimated that no more than 83,464 petitions were valid (65.2%, +/- 2.7%). (DirectAg)

>  Scientists have discovered the Italy’s first suspected case in a cow at a slaughterhouse. Prior to this discovery, the only reported cases of mad cow disease in Italy occurred in 1994 and involved two cows imported from Britain. The latest mad cow case was found at a slaughterhouse belonging to the Cremonini group, which is the exclusive meat supplier for McDonald’s restaurants across Italy.  (AgWeb)

>  French researchers have mapped the structure of a yeast prion, which may help researchers better understand and develop treatments for mad cow disease and other disorders, including Alzheimer’s disease. Mapping the yeast prion’s structure may help scientists determine how prions transform themselves into infectious agents. Researchers may also be able to develop ways to block or reverse the transformation that makes prions deadly. Prions are distorted proteins linked to mad cow disease and its human equivalent, Creutzfeldt-Jakob disease (CJD). The French researchers’ map of the yeast prion is not the first map of a prion. However, the yeast prion is considered a model for the way prions transform in mammals.  (AgWeb)

>  Pork producers have filed for legal action against the USDA in the recently announced termination of the pork checkoff program.  The group, which includes independent pork producers, the Michigan Pork Producers Association and the National Pork Producers Council, filed for a temporary restraining order and a preliminary injunction preserving the status quo and enjoining the termination of the pork checkoff program until a full and fair hearing has occurred.  Other independent producers and state pork organizations are expected to join the legal effort. (PRNewswire)

>  Missouri has established a state meat and poultry inspection program and is now responsible for administering the system. The state meat and poultry inspection program will exist simultaneously with the federal government’s inspection program. The state program will handle inspection requests from small businesses that prepare products requiring inspection for local markets. Federal laws require USDA inspection of meat and poultry products before they can be sold and shipped interstate or to foreign countries. State-inspected meat and poultry can only be sold within the state.  (AgWeb)

>  U.S. Agriculture Secretary Dan Glickman announced a USDA proposal to expand nutrition labeling requirements for meat and poultry, providing consumers with more information about fat, calorie, and cholesterol content.  The proposed nutritional labeling requirements for raw ground beef and chicken are comparable to existing requirements for multi-ingredient products such as sausage, luncheon meat, ground pork with seasonings, and bacon. Multi-ingredient products already require nutritional labeling on product packages. (AgWeb)

>  A Purdue University animal scientist claimed that the day is not far off when farms will be home to kinder, gentler chickens and harmonious hogs and yes, there is a gene, or set of genes, for docility. Purdue is looking into how non-aggressive chickens could be selected so that they do not have to have their sharp beaks trimmed to keep them from mercilessly pecking away at each other in their cages. (AnimalNet – Knight-Ridder Tribune)

>  Researchers at the University of North Carolina and the Centers for Disease Control and Prevention have found that during feeding, the tick vector for Lyme Disease actually transmits a highly variable population of Borrelia burgdorfi (the causative agent) into the host. In contrast, when the tick isn't feeding, the population is fairly homogenous. What this means is that the bacteria essentially adapts during the transmission process to maximize the chance of infecting the host.  Intriguingly, the fact that the tick spits so many different "flavors" of B. burgdorfi into the host seems to explain an observation made several years ago: Lyme bacteria delivered by ticks evade the host's immune response more successfully than do cultured bacteria injected into animals. The team suggests that future efforts to develop better vaccines could either focus on antigens produced within the tick before the bacteria population diversifies, or on surface proteins common to all of the otherwise variable bacteria. (AnimalNet – Scientific American Daily)

>  Veterinary researchers from Montana State University (MSU) are helping study immune cells to determine which genes are needed to develop new vaccines and breed healthier cattle and buffalo. The research, which focuses on “functional genomics,” targets a single form of a T-cell that is dominant in bovines. This type of T cell, which was discovered recently, may hold the answers researchers need to develop new vaccines. MSU researchers are working on the project with scientists from the University of Minnesota (UM) and Washington State University. UM has a large genome center that can do large-scale genetic sequencing, while Washington State is one of the nation’s premier bovine immunology labs.  (AgWeb)


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Agribusiness News

>  The FDA proposed rules that would require companies to submit data for government scrutiny before marketing foods or ingredients made from genetically modified crops. The FDA rejected calls for mandatory labels to identify the foods and instead issued guidelines for voluntary labeling for companies that plan to promote foods with or without ingredients derived from GM plants. Recent polls have found that most Americans favor mandatory labeling even though most U.S. consumers -- unlike Europeans -- also tell pollsters that they accept the new technology. Biotechnology and food industry leaders said that companies are ready to comply with the FDA's proposed rules. (E-markets – Star Tribune)


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Brakke Consulting Viewpoint
 
It was a rather exciting week in animal health.  The announcement of the acquisition of Ralston Purina by Nestle provided excellent cocktail hour conversation at the NAVC in Orlando.  Most of the pet food company executives other than those from Nestle and Ralston felt that this would be an opportunity to increase their own market share.  On the other hand, Nestle and Ralston executives thought it would be an excellent opportunity to become the largest pet food company in the world and enhance shareholder value.  It seems like we've heard that one somewhere before in our industry.

We were encouraged by all of the enthusiasm we observed at the NAVC for the upcoming year in animal health.  We like the air of optimism and wish everyone a very successful year.  However, we're not sure what happened to concern over the issues of food safety, lack of new products, and declining prices in the marketplace.  At least for a few days, the sun was shining in Orlando.  We hope that the optimism is well founded.

[Ron Brakke]
 
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