US – Cargill and Continental Grain Company have announced that they will acquire poultry producer Sanderson Farms for US$4.53 billion in an effort to bolster their presence in the US poultry market.
Upon completion of the transaction, Cargill and Continental Grain will combine the latter’s Wayne Farms subsidiary with Sanderson Farms to form a new, privately-held US poultry company.
According to a report by Food Dive, the new entity will control about 15% of U.S. chicken production, putting it in a better position to compete with larger competitors such as Tyson Foods and Pilgrim’s Pride.
Wayne Farms CEO Clint Rivers will lead the business, which will operate poultry processing plants and prepared-foods facilities across Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, and Texas.
Wayne Farms’ customer relationships across the foodservice sector are expected to complement Sanderson Farms’ grocery and retail relationships.
“We are proud to be joining with Cargill and Continental Grain and we are confident that they will be strong stewards of the Sanderson Farms team, brand and assets going forward,” said Joe Sanderson, chairman and CEO of Sanderson Farms.
“As part of the newly created company, Sanderson Farms and its new owners will remain committed to the employees, poultry producers, customers, communities, environment and animals under our care, and to continuing to deliver the highest quality products and the best service in our industry to our customers.”
The deal comes as the meat and poultry industries grapple with a shortage of workers that coincides with the spike in demand.
Foodservice outlets also are reopening, and restaurants are fueling an insatiable interest for chicken products from companies like Sanderson.
The deal, although attractive to Continental Grain and Cargill, runs the risk of drawing government attention given the sizable market share they would control of the U.S. chicken market.
Earlier in July, President Joe Biden signed a new executive order aimed at cracking down on anti-competitive practices in Big Tech, Meat processing, labor and numerous other sectors.
“Capitalism without competition isn’t capitalism. It’s exploitation,” Biden said at the White House in a speech before signing the directive.
With the executive order in place, the government may be reluctant to sign off on a deal that further consolidates power in the chicken space and removes another competitor as these hurdles still dog the industry.
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