Cargill and Continental Grain acquire Sanderson Farms for US$4.53 billion

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Sanderson Farm Company Update

Cargill and Continental Grain Corporation have jointly agreed to acquire Sanderson Farms. The US poultry producer is valued at US$4.53 billion amid soaring demand for chicken meat.

As part of the transaction, Sanderson Farms will merge with Wayne Farms, a subsidiary of the investment group Continental Grain, to form a new private poultry business.

According to the terms of the transaction, Sanderson Farm’s shareholders will receive $203 in cash per share, a 30.3% premium to the company’s share price on June 18, after media reports that the company is considering selling.

This transaction will enable Cargill to expand its international poultry business in the United States, one of the fastest growing markets in the world.

“Expanding our poultry products to the U.S. is a key enabler for us to meet the needs of our customers and consumers. With these outstanding businesses and our strong partnerships, we believe that we will provide our customers with an excellent portfolio of products and services,” Cargill Chairman and CEO David McLennan said.

When this deal took place, Americans had been consuming chicken at home and restaurants at record levels-seen as a healthier alternative to beef. The reopening of restaurants and fast food chains has also contributed to the increase in demand for meat, although it has also led to shortages in some parts of the country.

Sanderson Farms is the third largest poultry producer in the United States, second only to Tyson Foods and Pilgrim’s Pride, and has already been approached by many suitors.

Analysts believe that the Laurel, Mississippi-based group is one of the best performing companies in the industry.

Credit Suisse wrote in an analyst report that Sanderson Farm has “excellent facilities, good labor-management relations, and strong customer relationships” and that “60% has been achieved through capital investment and potential organic growth in the past eight years. Sales growth”.

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