•$4.5B deal will combine company with Wayne Farms
•Wayne Farms CEO Clint Rivers will lead business
•Deal expected to be complete by end of ’21 or early ’22
A local business whose humble beginnings were in chicken feed sold for a whole lot of scratch on Monday. Laurel-based Sanderson Farms, which is the only Fortune 1000 company in the state, is being purchased for a lot more than chicken feed. Laurel-based Sanderson Farms is being purchased for $4.53 billion in a transaction that will combine Sanderson and Wayne Farms, which is a subsidiary of Continental Grain Co. Wayne Farms CEO Clint Rivers will lead the combined business.
“The combination of Sanderson Farms and Wayne Farms will create a best-in-class U.S. poultry company with a high-quality asset base, complementary operating cultures and an industry-leading management team and workforce,” according to a press release from deal broker Cargill, Inc.“ The new company will be well positioned to enhance its service to customers across retail and food service and drive organic growth in an industry fueled by affordability and key consumer trends around the health, sustainability and versatility of chicken.”
Sanderson CEO and Chairman Joe Frank Sanderson said he is confident that the deal will be good for employees and customers.
“Since my grandfather founded Sanderson Farms 75 years ago, our many significant achievements have been driven by our commitment to providing the very best chicken products in a profitable manner that benefits each of the constituents who contribute to our success,” he said in a press release. “This transaction is the culmination of that commitment, as it delivers a significant value to our stockholders, reflecting the dedication of our team and our best-in-class assets, quality products, efficient and sustainable operations and respected brand.
“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. 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 purchase price of $203 per share represents a 30.3 percent premium to Sanderson Farms' unaffected share price of $155.74 on June 18, 2021, which was the last full trading day prior to media speculation about the potential sale of Sanderson Farms.
The Jones County Economic Development Authority has enjoyed a wonderful working relationship with Sanderson Farms over the years, said Ross Tucker, president of that agency.
“Sanderson Farms has been a cornerstone of our community since it was founded 75 years ago,” Tucker said. “Their commitment to excellence has extended past their business and into our community. Jones County has been touched by Sanderson’s generosity and involvement for many years.
“It is wonderful to see them reach this milestone with companies that share similar principles of supporting farmers and communities, and we look forward to working with the new joint venture. It has been a privilege to grow with Sanderson Farms and watch them achieve great success here in our shared home.”
Sanderson officials would not respond to reports of the rumors about the possible sale back in June, when company stock soared.
Local officials and business leaders were concerned about those reports. Though production workers and producers would still be needed no matter what the company name is, the loss of higher-paying corporate jobs at the company headquarters off Flynt Road would be a blow to the community, several leaders said on the condition of anonymity. Others who are familiar with the company noted that most of its leaders are close to or beyond retirement age and don’t have children or other close family members in top-tier positions to take the reins.
Sanderson employs approximately 1,100 people in Laurel — 450 on salary, 650 hourly, CFO Mike Cockrell said at the time. There are 400 or so employees at the headquarters. That number includes about 50 trainees who are not at the office every day “but are working at various company locations across the states in which we operate,” Cockrell said.
Continental Grain Chairman and CEO Paul Fribourg said, “We are very happy to partner with Cargill, with whom we have had a decades-long relationship between two family-owned companies. Sanderson Farms’ operations, best-in-class assets and valuable brand have underscored their success, and we have the highest respect for Joe Sanderson and the business and team he has built as the third-generation CEO.
“Wayne Farms has been one of the most important and successful parts of Continental Grain for almost 60 years, so bringing together two great partners with two great poultry companies will ensure good things for our customers, our grower partners and our employees.”
The new company will have state-of-the-art operations and will continue to invest in its workforce and in employee safety, according to the press release. Operations will include poultry-processing plants and prepared foods plants across Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina and Texas.
“At Cargill, we are committed to nourishing the world in a safe, responsible and sustainable way,” said David MacLennan, chairman and CEO of Cargill. “Expanding our poultry offerings to the U.S. is a key enabler of our ability to meet customer and consumer demands. With these great businesses and our strong partnership, we believe we will deliver a superior portfolio of products and services to our customers.”
Cargill expects to support the new joint venture with its longstanding relationships with retail and food-service customers. Wayne Farms, part of Continental Grain's food, agriculture and commodities investment portfolio since 1965, has roots in the poultry industry that go back more than a century.
The transaction is expected to close by the end of 2021 or early 2022 and will be subject to regulatory and Sanderson Farms stockholder approval and other customary closing conditions. The acquisition consortium has committed equity and debt financing in place to complete the transaction.
Upon the completion of the transaction, Sanderson Farms will become a private company, and its shares will no longer be traded on NASDAQ.
BofA Securities acted as the financial adviser to Cargill and Freshfields Bruckhaus Deringer (US) LLP acted as legal counsel. Gibson Dunn & Crutcher acted as tax counsel.
Centerview Partners LLC acted as financial advisor to Sanderson Farms and Wachtell Lipton Rosen & Katz and Fishman Haygood LLP acted as legal counsel.
Lazard acted as the financial adviser for Wayne Farms and Continental Grain, and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal counsel.
Cargill has 155,000 employees across 70 countries, connecting farmers with markets, customers with ingredients and people and animals with the food they need to thrive.
Conti is a privately owned global investor, owner and operator of companies with more than 200 years of history across the food and agribusiness spectrum.
Wayne Farms LLC is a U.S. poultry producer that is a subsidiary of Continental Grain Company. It owns and operates fresh and further-processed facilities throughout the Southeast and employs more than 9,000.