Good morning. One of Canada’s best known companies, McCain Foods, had ownership flaws identified decades ago – now a second generation is feuding because of it all over again. That’s in focus today, along with French-language hockey games and hearing aid technology.
NASA's Artemis II mission to fly by the moon, comprising of the Space Launch System (SLS) rocket with the Orion crew capsule, lifts off from the Kennedy Space Center in Cape Canaveral, Florida, U.S., April 1.Joe Skipper/Reuters
Up first
In the news
Space: Jeremy Hansen’s journey to the moon has begun. Artemis II marks the first time that humans have travelled beyond low Earth orbit in more than 50 years.
Trade: Bank of Canada Governor Tiff Macklem and a group of Bay Street executives will join Finance Minister François-Philippe Champagne on his trade mission to Beijing
Electric vehicles: Stellantis has proposed assembling Chinese electric cars at its idled plant near Toronto with partner Leapmotor, according to a Unifor union official
Labour: The U.S. says that Canada is failing to stop foreign goods made with forced labour from entering its market, prompting it to weigh more tariffs
Eleanor McCain in Toronto, April 26, 2017.Galit Rodan/The Canadian Press
In focus
Hot potato
Hi there, I’m Paul Waldie and I’m the Globe’s Europe Correspondent. But many years ago I covered the sibling feud that tore apart the McCain family and nearly broke up one of Canada’s best known companies; McCain Foods Ltd. I even wrote a book about the saga called A House Divided.
McCain Foods is a remarkable Canadian success story. If you’ve ever eaten at McDonald’s or almost any other fast food outlet, you’ve probably had a McCain French fry. Their frozen food products are sold in 160 countries.
Wallace and his older brother Harrison founded the business in 1956. They were the perfect pair for a start up. Wallace was the detail guy, full of hard charging energy and a take-no-prisoners approach to business. Harrison was the back-slapping salesman with the warm smile and easygoing manner.
Harrison and Wallace McCain at the site of the Florenceville factory, 1956.
They were co-chief executives and held equal ownership stakes – 33 per cent each, with the remainder split between two older brothers. They even lived side by side in mansions overlooking the St. John river in their hometown of Florenceville, N.B.
But underneath the successful veneer, tension was slowly building over an issue that affects many family businesses: succession.
Harrison favoured a nephew, Allison, while Wallace preferred his son, Michael. The issue came to a head in 1990 when Wallace appointed Michael head of McCain’s U.S. operations over the objections of Harrison. From then on, the feud between the brothers grew worse and they ended up in a legal battle that raged on for four years.
In the end, Wallace and Michael were effectively pushed out of McCain Foods by Harrison and the rest of the family, and they went on to acquire Maple Leaf Foods Inc. in 1995. But Wallace hung on to his McCain shares and the ownership was passed on to his four children after his death in 2011 (Harrison died in 2004 and his shares also went to his children).
As I read over the lawsuit filed last week by Wallace’s daughter Eleanor, I had a sense of déjà vu.
Like her father, she was alleging that she was being oppressed by other family members. Like her father, she was alleging that she chafed under the control of the family and that if she stepped out of line – by selling her McCain shares to an outsider – she would be ostracized.
The family-owned holding company, McCain Foods Group Inc., also deliberately undervalues the shares, she alleged, to ease tax liabilities and make it uneconomical to sell shares back to MFGI.
McCain’s frozen food products are sold in 160 countries.MARTIN BUREAU/AFP/Getty Images
And like her father, Eleanor was alleging that a dual-board structure put in place during the height of the Wallace and Harrison rift in the 1990s was stifling her ability to do what she wanted with her shares.
The McCains had been warned about the structure for years. It created one board for MFGI, which owns all the shares in McCain Foods, and one for the business.
The MFGI board is made up of representatives from the four family branches – Wallace, Harrison and their two brothers, as well as one outsider – and just about everyone who looked at the structure said it would only enshrine family resentments. The best solution, they said, would be to either appoint a group of outside directors to the MFGI board or take McCain Foods public.
That hasn’t happened and while McCain Foods is run by an outsider, the family control remains as tight as ever.
None of Eleanor’s allegations have been proven and the other McCains are adamant that her lawsuit has no merit. They also argue that they have every right to keep McCain private and that it has thrived under family ownership.
But given the growing size of the clan – now 55 members compared to 19 during the Wallace and Harrison era, and entering a third generation – it’s hard to imagine that this will be the last McCain family feud.
Charted
Canada’s prime job creator
The Canadian labour market has been relying on one industry for the bulk of its job creation: health care. According to payroll data from Statistics Canada, employment in health care and social assistance has risen by 6.4 per cent, or around 150,000 positions, at nearly double the expansion in all other industries.
Quoted
The biggest benefit, had this technology existed when we were in the thick of it, would have just been more time back to actually enjoy things. The sounds of birds, the speech development, music – all of the things that her hearing aid allows her to experience.
— Jennifer Gould, mother to nine-year-old Charlotte who uses hearing aids
Jennifer Gould’s daughter Charlotte has needed more than a dozen hearing aids because young children grow so rapidly, a problem that has long frustrated pediatric audiologists. But game-changing technology may be on the horizon for children with disabling hearing loss.
Up next
More files we’re following
Runway: Air Canada is scrambling to find a successor to Michael Rousseau after the airline’s board moved up the date of the CEO’s retirement by 12 months.
No-fly: Polymarket is banned in Ontario. Flyers advertising it were handed out outside the Jays game anyway.
Takeoff: Quebecor CEO Pierre-Karl Péladeau says the company’s sports division is in talks with the NHL and Rogers to renew a broadcast deal for French-language hockey games.
Q&A: Today at 11 a.m. ET, our reporters will be answering questions about Canada’s EV industry and the growing presence of Chinese EV companies.
Morning update
Global markets slid as hopes of a quick end to the Middle East conflict faded after U.S. President Donald Trump vowed more strikes on Iran.
Wall Street futures were in negative territory after a short-lived relief rally extended gains on North American markets yesterday. TSX futures followed sentiment lower.
Overseas, the pan-European STOXX 600 was down 1.06 per cent in morning trading. Britain’s FTSE 100 declined 0.24 per cent, Germany’s DAX dropped 1.81 per cent and France’s CAC 40 gave back 0.96 per cent.
In Asia, Japan’s Nikkei closed 2.38 per cent lower, while Hong Kong’s Hang Seng slid 0.7 per cent.
The Canadian dollar traded at 71.81 U.S. cents.