Family Business Magazine E-Newsletter
October 16, 2007



Contents
1.  Families will retain some control in SABMiller-Molson Coors merger.
2.  LeFrak Organization goes upscale.
3.  John Tyson becomes nonexecutive chairman at Tyson Foods.
4.  Multinationals seeking biofuels businesses stymied by Brazilian family owners.
5.  Does investing more in your business make sense?
6.  Questions to ask about your real estate.



1.  Families will retain some control in SABMiller-Molson Coors merger.  The Molson and Coors families will retain some control after SABMiller PLC and Molson Coors Brewing Co. merge their U.S. operations, the Wall Street Journal reported. "A person familiar with the deal said the Molson and Coors families didn't want to sell their entire company to SABMiller or another buyer," the article said. The deal, which the parties discussed "on and off for about a year" and must undergo antitrust review, will shake up the U.S. beer market, the Journal noted. It could increase pressure on market-leading Anheuser-Busch Cos. "to pursue a merger outside the U.S., where it has a relatively small presence and where greater opportunities for growth lie," the report noted. "In a message to employees, Anheuser Chief Executive August A. Busch IV said the brewer must capitalize on the 'significant transition confusion' that he predicted will occur when Miller and Molson Coors blend their U.S. operations," the article said.  (Source: Wall Street Journal, Oct. 10, 2007.)

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2.  LeFrak Organization goes upscale.  Since the death of second-generation patriarch Samuel J. LeFrak in 2003, the multibillion-dollar LeFrak Organization, known for its "boxy, unremarkable buildings" in Brooklyn, Queens and Manhattan, is going upscale, the New York Times recently reported. Samuel LeFrak's son, Richard, "has for the first time in family history reached beyond the New York area," the article said. He has bought office buildings in Beverly Hills, is developing a luxury high-rise apartment building on Hollywood Boulevard and is seeking a development site in London, the Times reported. Richard and his sons, Harrison and Jamie, have moved the family company's headquarters from the Lefrak City complex in Queens to Manhattan's 57th Street, the report noted. Many other successful New York real estate families, like the Roses, Rudins and Trumps, started out building working-class apartment buildings in the outer boroughs, according to the report. "Every real estate family that made its money in Brooklyn, Queens or the Bronx eventually has children and grandchildren who want to make their mark in Manhattan or some other glamour location," New York University urban planning professor Mitchell Moss told the Times. "But for most New Yorkers of a certain generation, LeFrak will always mean Lefrak City, no matter what they do in Hollywood."  (Source: New York Times, Oct. 9, 2007.)

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3.  John Tyson becomes nonexecutive chairman at Tyson Foods.  John Tyson, the 54-year-old grandson of the founder of Tyson Foods, will step down from his post as an executive officer to become nonexecutive chairman of the Springdale, Ark., meat-processing company, the Wall Street Journal reported. Tyson, who became chairman of Tyson Foods in 1998 and was chief executive from 2000 to 2006, said the move was "part of the company's succession planning," the article said. Richard L. Bond became the company's chief executive in 2006. The Journal reported that under the new arrangement, Tyson will not receive his $1.17 million salary and will not be eligible for an annual bonus. Instead, he will receive $300,000 a year "to provide services limited to advisory and public-relations duties that won't exceed 20 hours a month," the report noted.  (Source: Wall Street Journal, Oct. 1, 2007.)

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4.  Multinationals seeking biofuels businesses stymied by Brazilian family owners.  Large global companies want a piece of Brazil's sugar-cane ethanol business, but the families who control the country's sugar mills either refuse to sell out or are asking dramatically inflated prices, according to a Wall Street Journal report. "The standoff is preventing some big foreign players from getting into Brazil's promising ethanol market through acquisitions" and thus is delaying efforts to modernize and expand the country's ethanol industry, the report noted. "Many family-owned mills appear to be troubled," the article said. "The domestic sugar and ethanol industry is informally managed and highly fragmented.... Often, millers don't have reliable accounting books and are plagued by tax disputed and debt." Some global firms have tried to create new sugar-cane plantations from scratch, but "industry experts are reluctant to leave family companies where they've worked for decades," the Journal reported. "The best-positioned of Brazil's proud sugar-cane kings see their own chance to become global players. Yet they are wary of giving up on generations of family work -- or ceding total control of their companies."  (Source: Wall Street Journal, Sept. 10, 2007.)

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5.  Does investing more in your business make sense?  Before you invest more money in your family company, take time to consider whether it really makes sense, caution financial advisers Patrick O. Ring and Ross Adams in The Family Business Growth Handbook. "There is a significant difference in whether you think of yourself of managing a business or a family business," the authors note. "The former suggests an ability to step back and question whether the old-line business continues to be a prudent investment of family capital and how, or whether, it can be improved. The latter assumes that the traditional business will survive as a viable entity if the family just works harder and pours more money into it. Emotional ties can be hard to change." While it's important to take steps like professionalizing management, improving communication and forging mission and vision statements, that might not be enough, Ring and Adams write. "What is often overlooked is the fact that some businesses have become inherently tough investments."



For more strategies and techniques for increasing revenues, profits and shareholder value in a family-owned company, see The Family Business Growth Handbook. Learn more about the book and see the table of contents here.

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6.  Questions to ask about your real estate.  "Many families in trucking, farming or manufacturing enterprises may find that although real estate is not their core competency, they have 'backed into' the real estate business," write advisers G. Scott Budge and Geoffrey N. Irvine in the current issue of Family Business Magazine. "These families are also likely to discover that along with opportunities, owning real estate presents certain challenges." Budge and Irvine suggest seven questions that a family should ask itself about its real estate. Here are three of them:


For more questions to consider, see "Real estate risks and opportunities" by G. Scott Budge and Geoffrey N. Irvine, Family Business, Autumn 2007. Visit our website for subscription information.

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