Building on Chickens and "Rolled Back" Prices
By Stephanie Grimmett
Taipan Group's Dynamic Market Alert
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Building on Chickens and “Rolled Back” Prices
By Stephanie Grimmett, Managing Editor, Taipan
Let’s get something out of the way. I was born in North Little Rock, Arkansas. No, I don't have the accent, although a few of the colloquialisms like “phooey,” “slicker than snot” and the classic “y’all” do pop out at random times.
I grew up in a far colder climate, but every summer my parents would cram me and two weeks’ worth of stuff into our car and drive down to Fayetteville, the largest city in the northwest corner of Arkansas, to visit various family members.
In case you didn’t spend time every summer in the northern half of "the natural state," Fayetteville’s economy used to center around the University of Arkansas, which educates 18,000 of the state’s best and brightest each year.
I remember Fayetteville as genteel and Old South. It rests on the western edge of the Ozark Mountains, right next to all of those hillbillies (some of whom I’m related to) and their soybean farms and horse ranches.
Fayetteville first became well known in the region as a vacation spot for the wealthy families of Missouri, Arkansas, Texas and Oklahoma during the turn of the last century. The northwest corner of the state was built up around the healing powers of a collection of natural springs that the upper crust of the late 19th and early 20th centuries loved so much.
Then Tyson happened. The chicken producer began in Springdale, 9 miles north of Fayetteville, when John Tyson started selling produce out of the back of his truck in 1931. Tyson went public in 1963 and bought 19 other chicken factories during the next 26 years, many of which were in and around Arkansas. It’s now the world’s largest poultry company, and its headquarters are still in Springdale.
Wal-Mart came in next. Sam Walton’s first store appeared in Bentonville, which is about 20 miles north of Springdale, in 1945. The town eventually became the worldwide headquarters for Wal-Mart, and without it, no one would even know the small community of Bentonville existed.
As Wal-Mart and Tyson continued to expand, a third national chain entered the area to cater to the needs of the other two companies.
J. B. Hunt, the second-largest trucking corporation in America, soon united its series of regional centers into a large headquarters in Lowell, Arkansas. The "transportation logistics company," as it calls itself, sits right in the middle of the road, halfway between Tyson in Springdale and Wal-Mart in Bentonville.
Pretty soon Wal-Mart's major vendors, like Johnson & Johnson and Proctor & Gamble, set up offices in the area to cater to their biggest client. And that’s how a new corporate hub was born.
But as Fayetteville and its surrounding area have flourished under all of those chickens and "rolled back" prices, my birthplace hasn't faired so well.
Little Rock recently received some really bad news -- twice.
First Acxiom Corporation (AXCM: NASDAQ), the fourth-largest publicly traded company in the city, announced a $2.25 billion buyout by two private equity firms: ValueAct Capital Partners and Silver Lake Partners.
Acxiom is an IT services company that opened a new building in downtown Little Rock in 2003. The two firms haven't said whether or not they'll move Acxiom's headquarters or what exactly is going to change after the buyout is final in July.
And a few weeks after the bad news about Acxiom, Little Rock heard that the largest publicly traded company in the city is also being bought out.
Goldman Sachs and TPG Incorporated agreed to buy mobile-phone service provider Alltel Corporation (AT: NYSE) in late May.
Alltel is ranked as 251 on the Fortune 500 list, and Goldman Sachs and TPG shelled out $24.7 billion for the company, the largest telecommunications buyout to date.
Alltel and Acxiom employ more than 5,000 people in central Arkansas, and the buyouts have sent a ripple of apprehension through the state as employees wait to find out whether or not the companies will remain in Little Rock.
In the meantime, northwest Arkansas continues to grow.
My grandparents no longer like Fayetteville. They say it’s been taken over by a “different sort of people” (translation: damn yankees).
And you can bet, if Alltel and Axciom do end up moving out of Little Rock, it’s just going to transfer even more focus onto to the northwest corner of the state. And eventually, Wal-Mart and Tyson may be the well from which all of Arkansas’s economy springs.
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