Chicken farmer Sanderson Farms to sell to Continental Grain, Cargill

Sanderson Farms Inc. is set to close a deal to sell for around $ 4.5 billion, people familiar with the matter say, as the poultry giant rides a surge in demand for chicken products .

Sanderson is in advanced talks with Cargill Inc. and agricultural investment firm Continental Grain Co., which owns a smaller chicken processor, the people said. The deal could be finalized by Monday, they said.

SANDERSON FARMS EXPLORE SALE

It would value Sanderson at $ 203 a share, about 30% above the price before the Wall Street Journal reported in June that the company had attracted interest from suitors, including Continental.

Sanderson Farms Inc. is set to close a deal to sell for around $ 4.5 billion, people familiar with the matter say, as the poultry giant rides a surge in demand for chicken products . Photographic illustration by Igor Golovniov / SOPA Images / LightRocke

Sanderson, based in Mississippi, is the third-largest chicken producer in the country. It operates 13 poultry plants from North Carolina to Texas, processing approximately 13.6 million chickens per week. The company supplies grocery chains like Walmart Inc. and Albertsons Cos. as well as restaurant distributors such as Sysco Corp. and US Foods Holding Corp.

According to data from Watt Poultry USA, the combination of Sanderson with Wayne Farms LLC, based in Georgia, a poultry company owned by Continental, would form a new competitor accounting for about 15% of chicken production in the United States. Tyson Foods Inc. leads the industry with about a fifth of the market, while Pilgrim’s Pride Corp. represents about 16% of the national total.

These are boom times for the often cyclical chicken industry. Growing demand for chicken breasts, wings and other products has propelled poultry prices as restaurants reopen and – in the case of chains like McDonald’s Corp. MCD and Shake Shack Inc. – fight to launch crispy chicken sandwiches. Wholesale breasts prices are about double what they were at the start of the year, according to data from the US Department of Agriculture; wing prices have reached record highs.

Sanderson’s sales for the quarter ended April 30 increased by about a third and its profits jumped to $ 97 million, from $ 6 million during the same period in 2020.

Sanderson debuted in 1947 as a farm supply store. Joe Sanderson, the founder’s grandson, has been the company’s chief executive since 1989 and chairman since 1998. He owns about 3.7% of the company’s stock, according to a regulatory filing.

Wayne Farms was founded in 1895 as a flour milling business and then expanded into poultry. Continental bought the company in 1981 and in 2015 announced plans for an initial public offering for Wayne, aimed at consolidating small private and family-owned chicken businesses. Continental suspended the planned IPO after outbreaks of bird flu killed millions of birds, raising costs for U.S. poultry and egg suppliers.

CLICK HERE TO LEARN MORE ABOUT FOX BUSINESS

Cargill, a 156-year-old company with 155,000 employees in 70 countries, is one of the world’s largest food suppliers. It buys crops, markets sugar and cotton, and processes meat, supplying some of the world’s leading consumer brands and restaurant chains. The Minnesota-based company is a major supplier of chicken to Asia and has other poultry operations in Canada, the UK and Latin America.

New York-based Continental invests in food companies including giants like Kraft Heinz Co. KHC 0.70% and Burger King’s parent company Restaurant Brands International Inc. QSR -0.42%