Sanderson Farms Inc. has agreed to sell for around $ 4.5 billion as the poultry giant rides a surge in demand for chicken products.
Cargill Inc. and agricultural investment firm Continental Grain Co., which owns a smaller chicken processor, said on Monday they had reached a deal to privatize Sanderson.
The deal values Sanderson at $ 203 per share, about 30% above the share price before the Wall Street Journal reported in June that the company had attracted interest from suitors, including Continental. The Journal reported on Sunday that the three were close to reaching a deal.
Sanderson, based in Mississippi, is the third-largest chicken producer in the country. It operates 13 poultry plants from North Carolina to Texas, processing approximately 13.6 million chickens per week. The company supplies grocery chains like Walmart Inc. and Albertsons Cos. as well as restaurant distributors such as Sysco Corp. and US Foods Holding Corp.
According to data from Watt Poultry USA, the combination of Sanderson with Wayne Farms LLC, based in Georgia, a poultry company owned by Continental, would form a new competitor accounting for about 15% of chicken production in the United States. Tyson Foods Inc. leads the industry with about a fifth of the market, while Pilgrim’s Pride Corp. represents about 16% of the national total.