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The
combination with Continental's Wayne Farms will allow Sanderson
Farms, the third-largest poultry producer in the United States,
strengthen its position and help it better compete with rivals
Tyson Foods and Pilgrim's Pride Corp.
Wayne Farms Chief Executive Officer Clint Rivers will lead the
combined business.
Demand for chicken wings and other chicken products have been
rising in recent months as restaurants reopened in the United
States, boosting sales at Sanderson Farms and rival Tyson Foods
Inc.
Cargill and Continental Grain offered $203 per Sanderson Farms
share, representing a premium of about 11% to the stock's
closing price on Friday.
A Reuters report in June had said Sanderson Farms had drawn
interest from buyers including agricultural investment firm
Continental.
Several fast-food chains, including Yum Brands Inc's KFC and
Restaurant Brands International Inc's Burger King, have launched
chicken sandwiches, while Wingstop Inc has been doubling down on
chicken thighs to meet rising demand.
Prices of chicken products, especially those of wings and
breasts, have risen as easing pandemic-related restrictions
bring consumers back to restaurants and more fast-food chains
create fried-chicken sandwiches.
Sanderson Farms shares closed at $182.37 on Friday, gaining 40%
so far this year, and giving the company a market value of $4.07
billion. The stock has risen 17% since reports emerged about
Sanderson Farms exploring a sale.
J.P. Morgan analysts said in June a deal between Continental
Grain and Sanderson Farms would draw some government attention,
given recent lawsuits regarding chicken price fixing and as a
combined entity would control 15% of the country's chicken
market.
(Reporting by Praveen Paramasivam and Chavi Mehta in Bengaluru;
Editing by Subhranshu Sahu)
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