Massive Recall of Contaminated Beef Forces Immediate Closure of PE-Owned US Meat Company
Topps, the largest US maker of frozen meat patties, was forced into immediate closure following a massive government-ordered recall of hamburger meat tainted with the potentially fatal E. coli bacteria.
Topps products were sold nationally through Wal-Mart and major supermarket chains as well as to food service companies operating in schools, hospitals restaurants and hotels.
An initial recall of September 25 (332,000 pounds) quickly grew into a nationwide recall of nearly 22 million tons of meat, the second largest beef recall in US history. On October 5, the company announced that it could not survive the recall of product equivalent to the firm's entire annual revenues. With over 30 reported cases of E. coli poisoning, the company was hit with individual and class action law suits by individuals who fell ill after eating the contaminated beef.
According to the US Department of Agriculture, which had moved from initially suspending ground beef production to suspending nearly the entire Topps product line, action was required due to "inadequate process controls." The size of the recall in part stemmed from the company's practice of mixing older production beef with new, making it impossible to identify the specific source of contamination.
"In one week we have gone from the largest US manufacturer of frozen hamburgers to a company that cannot overcome the economic reality of a recall this large," said the company's chief operating officer. Beyond evoking "tragedy", Topps executives offered no explanation for the sudden collapse, declining to answer specific questions from reporters investigating the plant's shutdown.
Private equity firm Strategic Investments purchased a controlling interest in the company in 2003. A smaller share was also owned by Rand Capital, a smaller private equity company which had been increasing its stake since the initial buyout.