With Chicken Prices Soaring, Sanderson Farms Sold For $ 4.5 Billion | Alabama News
Sanderson Farms, the country’s third-largest poultry producer, is bought out for $ 4.53 billion as chicken prices skyrocket.
Cargill and privately-held Continental Grain have formed a joint venture to acquire Sanderson and will pay $ 203 per share in cash for a company that processed more than 4.8 billion pounds of meat last year.
The companies plan to combine Sanderson Farms with Wayne Farms, a subsidiary of Continental Grain, to form a new private poultry business. Operations will include poultry processing plants and prepared feed plants in Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina and Texas.
Wayne Farms has over 9,000 employees. It manufactures products under brands such as Wayne Farms Fresh & Prepared Chicken; Platinum Harvest premium fresh chicken; Chef’s Craft gourmet chicken; Premium Naked Truth Chicken and Premium Ladybirdy Chicken.
Sanderson Farms, based in Laurel, Mississippi, has 17,000 employees and 12 factories. She processes 13.6 million chickens per week.
The deal comes as chicken prices rise. Consumers paid an average of $ 3.35 a pound for boneless chicken breasts in June, according to the US Bureau of Labor Statistics. That’s against $ 3.05 in June 2019.
Plant closures linked to the pandemic last year and winter storms in the South earlier this year have had an impact on supplies.
The price increases were compounded by demand from large restaurant chains. McDonald’s Corp., Popeyes Louisiana Kitchen Inc., Wendy’s Co., and Burger King have all recently introduced new variations of chicken sandwiches. McDonald’s cited chicken sandwiches, as well as a McNugget chicken meal promotion with boy group BTS, for its better-than-expected sales in the second quarter.
Some restaurant chains, like Applebee’s and Chilis, which were forced to close dining rooms during the pandemic, have also launched delivery-only brands of chicken wings.
In a conference call with investors last week, WingStop, the chicken wing chain, said the price of wings in the spot market was up 125% and that it expects the price of wings to be up 125%. let it be the same for the rest of the year.
Sanderson Farms sales climbed more than 34% in the second quarter compared to the same three-month period last year.
“Expanding our poultry offerings in the United States is a key factor in our ability to meet customer and consumer demands,” Cargill President and CEO David MacLennan said in a statement prepared Monday.
Wayne Farms CEO Clint Rivers will lead the combined company.
The American poultry industry has operated under a cloud in recent years. Restaurant chains, food producers and grocers including Walmart, Kroger and Chick-fil-A sued Sanderson Farms, Wayne Farms and other poultry producers in 2016, alleging the companies conspired to fix prices poultry over an eight-year period.
The US Department of Justice intervened in the case and charged at least 10 people with antitrust violations, including current and former employees of Pilgrim’s Pride, Claxton Poultry Farms, Perdue Farms and Koch Foods. Sanderson Farms and Wayne Farms have not been charged. Sanderson received a subpoena in the case in 2019 and said he was cooperating.
Sanderson Farms will become a private company and its shares will no longer be traded on the Nasdaq. Shares jumped 7% to $ 195.38 in morning trading.
The deal is expected to be finalized by the end of the year or early next year. It still needs the approval of the shareholders of Sanderson Farms.
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