Sanderson Farms, one of nation’s third largest poultry producer, is being acquired for $4.53 billion as the price of chicken soars.
Cargill and privately held Continental Grain formed a joint venture to acquire Sanderson and will pay $203 per share in cash for a company that last year processed more than 4.8 billion pounds of meat.
The companies plan to combine Sanderson Farms with Wayne Farms, a Continental Grain subsidiary, to form a new, privately held poultry business. Operations will include poultry processing plants and prepared foods plants across Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, and Texas.
Wayne Farms has more than 9,000 employees. It makes products under brand names including Wayne Farms fresh and prepared chicken; Platinum Harvest premium fresh chicken; Chef’s Craft gourmet chicken; Naked Truth premium chicken and Ladybirdy premium chicken.
After falling last year, chicken prices have begun to surge. Major restaurant chains, seizing on demand, have begun to offer their own variations of fried chicken sandwiches, further heightening demand.
Sales at Sanderson Farms soared more than 34% during the second quarter compared with the same three-month period last year.
“Expanding our poultry offerings to the U.S. is a key enabler of our ability to meet customer and consumer demands,” Cargill Chairman and CEO David MacLennan said in a prepared statement Monday.
Wayne Farms CEO Clint Rivers will lead the combined company.
Sanderson Farms, based in Laurel, Mississippi, will become a private company and its shares will no longer be traded on Nasdaq. Shares jumped about 8% before the opening bell.
The deal is expected to close by the end of this year or early next year. It still needs approval from Sanderson Farms stockholders.