JV between Cargill and Continental Grain to buy Sanderson Farms
A joint venture led by Minneapolis’s Cargill and New York’s Continental Grain Co. has an agreement to pay $4.5 billion to buy Sanderson Farms, Inc., a chicken processor. The idea is to combine Sanderson Farms with Wayne Farms, a Continental Grain affiliate.
The deal is anticipated to finish by the end of 2021 or the beginning of 2022, and Wayne Farms CEO Clint Rivers will serve as the combined company’s CEO.
Paul Fribourg, chairman and CEO of Continental Grain, stated, “We are very happy to partner with Cargill, with whom we have had a decades-long relationship between two family-owned companies.” “Wayne Farms has been a key component of Continental Grain for nearly 60 years, so combining two outstanding partners with two outstanding poultry companies will benefit our grower partners, consumers, and staff members.”
In fiscal 2020, Sanderson Farms generated $3.56 billion in revenue. The company employs over 17,000 people, has 13 processing factories, and can process 1.3 million birds weekly.
Joe Sanderson, chairman and CEO of Sanderson Farms, Inc., stated, “This transaction is the culmination of that commitment, as it delivers a significant value to our stockholders, reflecting the dedication of our team, and our best-in-class assets, quality products, efficient and sustainable operations, and respected brand.” “We are thrilled to be partnering with Cargill and Continental Grain and we know they will take excellent care of the Sanderson Farms team, assets, and brand in the future.”
Wayne Farms, a company based in Oakwood, Georgia, employs about 9,000 people, has 11 factories, and its sales were $2.2 billion in 2020.Cargill stated that it will use its connections with retail and foodservice clients to support the new joint venture.
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According to Cargill’s chairman and CEO, David MacLennan, “growing our poultry offerings to the US is a key enabler of our ability to meet customer and consumer demands.” “We think we will provide our customers with a superior portfolio of products and services with these fantastic businesses and our solid partnership.”
The purchase will be paid for with cash, with Sanderson Farms stockholders receiving $203 for each share. According to Continental Grain, the purchase price is 30.3% higher than Sanderson Farms’ unaltered share price of $155.74 on June 18, the final full trading day before media rumors regarding the possible sale of Sanderson Farms surfaced.