US- Sanderson Farms, the fourth-largest poultry processer in the US, has said that it no longer expects its merger deal with Wayne Farms to be closed in the first half of 2022.

In a filing with the U.S. Securities and Exchange Commission, the poultry company also said the businesses are “still working to satisfy the other conditions” in order for the deal to be completed before considering the next steps to close the agreement.

However, the company stated there “can be no assurance” that the companies will satisfy the closing conditions of the merger or that the deal will close before the end date in the merger agreement of Aug. 8, 2022, which was set in a previous SEC filing.

The plans to merge came about when Cargill and Continental Grain agreed to purchase Sanderson Farms for US$4.53 billion last August with plans to join the business with Wayne Farms to create a new privately held company.

The closing of the agreement has stalled just when the Department of Justice’s (DOJ) antitrust division is continuing to scrutinize the terms and conditions involved in the merging.

Last year, the DOJ issued a “second request” to the companies asking for more information about the deal, Sanderson Farms revealed in an SEC filing.

The DOJ has not yet announced the status of the merger but if the government nixes the deal, the companies could be prepared to fight the decision in court, a Seeking Alpha report said, citing Dealreporter.

The plans to merge came about when Cargill and Continental Grain agreed to purchase Sanderson Farms for US$4.53 billion last August with plans to join the business with Wayne Farms- a subsidiary of Continental- to create a new privately held company.

If the move will be successful, the new company would become the third-largest poultry processor in the US competing with Tyson Foods, Cargill Meat, OSI Group, Hormel Foods Corp, Perdue Farm, Koch Foods, Keystone Foods, JBS USA Holdings, and Others, the agreement highlighted.

The merger is being considered when the global poultry market is poised for growth driven by increasing production and consumption of poultry meat compared to other meat products.

Additionally, market players are focused on adopting strategies such as business and capacity expansions, in order to strengthen their foothold in the global market.

Coherent Markert Insights projects the market size globally valued at US$26.7billion in 2018 will reach US$34.7 billion by 2027 growing at a CAGR of 3.0% in terms of revenue.

Although the growth is anticipated, the merger is set for an uphill battle to pass regulatory approval, as the Biden administration has publicly targeted concentration in the meat industry and has called out meat processors for raking in record profits amid inflation, according to Food Dive.

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