Sexton Foods - John Sexton & Co. Purchased By Beatrice Foods

John Sexton & Co. Purchased By Beatrice Foods

In 1968, Mack Sexton was approached by Beatrice Foods with an offer to purchase the John Sexton & Co. Beatrice Foods was attracted to Sexton Quality Foods’ distribution network, quality, variety of private label products, specialized food offerings, sales force and profitability. Mack Sexton’s initial response was no, but Beatrice Foods was very interested. Eventually both parties reached an agreement. Beatrice Foods increased the purchase, pledged capital to expand Sexton Quality Foods distribution network, pledged capital to introduce a new Sexton frozen product line and pledged that the Sexton leadership would continue to lead and operate the company as a separate entity. On December 20, 1968, Beatrice Foods acquired the business and assets of John Sexton & Co., exchanging approximately 375,000 shares of Beatrice's preferred convertible preference stock valued at $37,500,000. John Sexton & Co. would become a separate independent division of Beatrice Foods still led by Mack Sexton (son of Franklin), William Egan (son of Helen) and William Sexton (son of Sherman). Mack became a vice president of Beatrice and a Beatrice board member. John Sexton & Co. put Beatrice Foods into the wholesale grocery business and Beatrice put John Sexton & Co. into the frozen foods business. Beatrice Foods and the Sexton leadership were interested in maximizing the investment in John Sexton & Co. by growing the company. In 1969, rather than proceeding with the original Sexton Quality Foods plan to acquire a frozen food manufacturer, Sexton tapped Beatrice Foods frozen foods expertise and capital to launch a Sexton frozen product line that included frozen meats, fruits, vegetables and ethnic entrees. Sexton Quality Foods new frozen line required the addition of industrial freezer storage to all 12-branch warehouses and retrofitting all delivery trucks with freezers. Over the next 4 years, six of the eight planned additional Sexton branch warehouses were opened in Hawaii, Indianapolis, Houston, Saint Louis, Seattle and Minneapolis.

In January 1978, Thomas G. Sexton, son of the founder, retired president and chairman of the company died at the age of 88 at his home in Buffalo Grove, IL. Tom Sexton began work for his father in 1909 at the Lake & Franklin location. His first job was as a teamster delivering grocery in Chicago by horse and wagon. His career spanned 51 years until his retirement in 1959.

Beatrice Foods operated John Sexton & Co. as an independent division until 1983. Mack Sexton remained president of John Sexton & Co., a vice president of Beatrice and had a seat on the Beatrice board of directors until his retirement in 1981. A legal side note, Mack Sexton was the defendant in the first successful age discrimination case. Beatrice allegedly pressured Mack to improve business results. Mack decided to remove family members from the company. On January 24, 1977, Mack Sexton, president of the Sexton Division, called his cousin William C. Sexton (son of Sherman J. ) into his office and discharged him, indicating that more aggressive "younger blood" was required for management. William Sexton was 59 years old and a 41-year employee. Please see Sexton v. Beatrice Foods for more information. By the early 1980s Beatrice Foods was a $12 billion far-reaching multinational corporation with diverse holdings including Sexton Foods, Tropicana, Butter Ball Turkey, Culligan, Avis Rent-a-Car, Rusty Jones, Samsonite Luggage and Playtex. Beatrice Foods had increasingly focused on divisions that yielded the larger profit margins than food, which typically yields consistent 2% to 3% profit margins. As a result, Beatrice Foods withheld capital investment into its food divisions.