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An internal family conflict is roiling McCain Foods, the world’s largest producer of frozen french fries, as the daughter of its co-founder seeks a payout of more than C$1bn (US $725mn) to leave the privately held group.
Three decades after McCain Foods’ founders fought a bitter succession battle over the company, the next generation is now locked in a new dispute over the global empire, a top supplier to McDonald’s with annual revenue of C$16bn.
Eleanor McCain, a 56-year-old Toronto musician, wants to sell her stake to focus on “philanthropy and for portfolio diversification and estate-planning purposes”, her spokesperson said in a statement to the Financial Times.
But other family members do not accept her valuation of her stake, although negotiations remain ongoing, according to a person familiar with the governance structure.
It is the latest flashpoint in an intergenerational conflict involving multiple branches of rich and influential siblings and cousins, who remain scarred by a costly court battle that tore the family apart in the 1990s.
Dimitry Anastakis, a professor at the University of Toronto’s Rotman School, described it as “one of the deepest schisms in Canadian business history”.
Eleanor’s father, Wallace McCain, who co-founded McCain Foods in 1957 with his brother Harrison, built a global frozen food company that made them one of the richest families in the country.
“One in every four fries in the world is a McCain Foods fry,” according to the company website.
The brothers’ “brutal” clash over strategy and control triggered a three-year court fight that ultimately saw Harrison’s side win. Legal costs exceeded C$20mn, and members of the Wallace branch later went on to take control of Maple Leaf Foods, he said.
While Eleanor McCain has no role in the daily running of McCain Foods, her brother Scott McCain is chair of the company.
McCain Foods is governed through a two-tier structure, with a family holding company overseeing a separate operating board that includes independent directors.
It was designed to insulate management from family disputes but is “somewhat complicated”, according to a company history.
That structure must now determine how Eleanor McCain’s stake is valued, or risk another lengthy court battle.
“To effect an exit, Ms McCain is not demanding anything. She is simply exercising her unrestricted right to sell her shares, the exact same right available to all other shareholders in the company,” the statement said. “(Eleanor) has consistently engaged constructively, in good faith, and would like to conclude this matter in a fair, timely and confidential fashion.”
A friend of Eleanor McCain, who spoke on the condition of anonymity, said her desire to exit raised complicated questions about the family business structure. “There’s a lot of emotion, this business was co-founded by her dad,” the friend said. “It is a big thing to walk away from.”
McCain secured the contract to supply McDonald’s continental European and UK restaurants with McCain-made fries in 1977. But success and fortune also brought challenges for the family.
Court battles over the years have revealed details of their lavish lifestyle and fortune, including net worth in the hundreds of millions of dollars, multiple homes and boats and eye-popping bills for private school tuition, landscaping, yoga and pilates coaching.
Eleanor McCain’s divorce from her husband Jeff Melanson in December 2017 generated scrutiny during a two-year legal fight over whether he had “tricked her” into marrying him.
Court documents showed her net worth was C$365.8mn when she sought an annulment of the marriage, to avoid paying the C$5mn agreed in their prenuptial agreement.
Another family friend of Eleanor, who also spoke on condition of anonymity, told the Financial Times no one wants a repeat of the past where the buyout ends up in a messy public court battle, adding he hoped “it can be resolved without too many lawyers”.
Tony Maiorino, director of the Royal Bank of Canada’s family office services, said family-run businesses often end up in disputes over equity, leadership and vision if proper governance structures are not in place.
“You’re in a situation where there’s an opportunity for that complexity to lead to poor outcomes,” he said.
A representative of the McCain family declined to comment.