Business

Sanderson Farms Consider Selling-WSJ

Poultry giant

Sanderson Farm Co., Ltd.

SAFM 6.96%

As demand for chicken products grows, people familiar with the matter say they are looking for a sale.

Sanderson Farms asks Centerview Partners for advice on potential sales and Continental Grain Co, an agricultural investment firm that owns a small chicken processor. People said they were attracting attention from suitors such as. This process may not sell.

Mississippi-based Sanderson is the third largest chicken producer in the United States in terms of processing capacity, with a market value of about $ 3.5 billion on Monday afternoon, and buyers are expected to pay a premium for it. ..

As pandemics are lifted and restaurants reopen, demand for chicken breasts, wings and other products is increasing. Increased sales and prices.. At the same time, consumers continue to spend more on groceries as many are still working from home. The cost of boneless and skinless chicken breasts has more than doubled since the beginning of the year, and wing prices set a record.

As a result, Sanderson reported higher-than-expected sales and profits last month.

The cost of meat companies is also rising. Grain priceGenerally, the largest cost of raising poultry has skyrocketed over the past year due to increased exports to China and bad weather in South American farmers. Labor shortages in rural areas, where major slaughterhouses are located, have forced poultry producers to raise wages and increase benefits for hiring and retaining workers. Some companies, including Sanderson, New investment in automation..

The U.S. chicken industry is dominated by a few major companies, including:

Tyson Foods Co., Ltd.

According to a Watt Poultry USA study, it processes about one-fifth of the country’s poultry.

Under the contract with Continental, Sanderson will merge with Georgia-based Wayne Farm LLC to become Continental’s own poultry producer, forming a company that produces approximately 15% of the country’s chicken. 2nd place player

Pilgrim’s pride Co., Ltd.

It produces about 16% of the whole country.

Sanderson said in October 2020 that it rejected a one-sided takeover approach from Duration Capital Management, which stated that chicken producers were too low.

Sanderson was founded in 1947 as an agricultural store. Joe Sanderson, the grandson of founder DR Sanderson, has been the company’s CEO since 1989 and chairman since 1998.

Wayne Farms was founded in 1895, expanded to poultry, and has its roots in a feed milling company acquired by Continental in 1981. In 2015, the company submitted a plan to raise $ 234 million in Wayne’s initial public offering as part of its growth strategy. According to a document filed with US securities regulators, it will consolidate small private and family-owned poultry companies.Continental Airlines withdraws IPO program as US poultry industry Fighting the outbreak of bird flu It killed millions of birds and pushed up the cost of poultry and egg companies.

The US poultry industry is facing scrutiny from an ongoing criminal investigation by the US Department of Justice against allegations that executives of major chicken companies attempted price-fixing. No one in Sanderson or Wayne has been charged.

Write to Jacob Bungi jacob.bunge@wsj.com And in Karalombard cara.lombardo@wsj.com

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Sanderson Farms Consider Selling-WSJ

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