$4.5-billion sale has local officials concerned
The pending sale of Sanderson Farms has some local officials running around like the chicken company’s headquarters is being cut off.
“The whole thing is kind of frightening,” Laurel Mayor Johnny Magee said. “It’s scary for the whole community. Sanderson employs a lot of people.”
Sanderson has about 1,100 people on the payroll in Laurel. About 450 of those are salaried employees who work out of the headquarters on Flynt Road. What will happen to those higher-paying jobs after the state’s only Fortune 1000 company is dissolved and operating under the umbrella of Cargill Inc. and Continental Grain Co.?
For locals, that’s the multimillion-dollar question. And since the $4.5-billion deal was announced, no company officials have said anything to allay locals’ fears about those corporate jobs flying the coop.
“There’s not much I can say about what will happen post-closing of the transaction,” Sanderson CFO and Treasurer Mike Cockrell said. “We’re encouraged that they care a lot about their employees and put them at the top of the priority list.”
Sanderson Farms has been a great corporate citizen, Magee agreed, but Laurel has been good to the home-grown company, too, he said. The city has approved every tax break available to the company over the years, among other things.
The news of the sale blindsided Magee, he said.
“We haven’t been informed about anything,” before or after the announced deal, he said Tuesday. “We haven’t had a conversation with anyone at Sanderson about it. I don’t know what’s going to happen in Laurel.
“The home office won’t be here, but there will still be a presence in Laurel, so that’s a positive.”
The probability of losing local high-salaried jobs of executives, accountants, pilots and the like is what concerns local officials, Magee agreed. Those positions will likely be eliminated or drastically reduced since they would represent a “duplication of services,” that wouldn’t be cost-efficient, a source familiar with similar mergers said.
Ross Tucker, president of the Jones County Economic Development Authority, said he isn’t sure what the plans are, but his office will be there to assist if needed.
“We look forward to working with the new joint venture,” he said. “It has been a privilege to grow with Sanderson Farms and watch them achieve great success here in our shared home.”
Humble beginnings to billion-dollar sale
Sanderson Farms, which had humble beginnings in Laurel 75 years ago, is
being purchased for $4.53 billion by Cargill and Continental. Wayne Farms is a subsidiary of Continental. Cargill spokesman Daniel Sullivan said it was too early to comment on “specific integration decisions” since the transaction has yet to close.
“The joint venture, which will be operated by a separate board, will be setting the strategy for the new company,” he said. “However, Cargill, Continental Grain and Sanderson Farms are committed to operating in accordance with our stated values, including putting people first, doing the right thing and reaching higher.”
Wayne Farms CEO Clint Rivers will lead the combined business, but “both companies will continue normal operations while the transaction goes through the regulatory approval process, which will take some months,” said Frank Singleton, spokesman for Wayne Farms.
The transaction is subject to approval by shareholders, Cockrell said. Sanderson officials are scrambling to file paperwork with the U.S. Securities and Exchange Commission, plus they’re preparing for a shareholders’ meeting on Thursday and to close out the year on Halloween, he said.
It will be a “cash transaction,” and all of Sand- erson’s buildings and corporate jets will be the property of the new owners. Sanderson has eight of the 10 newest facilities in the industry, including a $15 million state-of-the- art hatchery that opened at Howard Technology Park last year. The deal also included poultry-processing and prepared-foods plants across Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina and Texas.
“The partner will be good stewards of the assets,” Cockrell said. “They have a long track record of success.”
With 155,000 employees in 70 countries, Cargill is one of the largest private
companies in the world, Cockrell said. “But just like us, they started as a family business, so their values are very similar to ours,” he said.
Questions abound for independent growers
Since the deal was announced, there have also been plenty of questions about the future of local independent growers with the new company.
“I’m sure Cargill shares our appreciation for the role they play,” Cockrell said. “You’ve got to have contractors. We’ve always had a great relationship with ours, and we expect that to continue. Growers are essential to the business.”
The new company is expected to continue under the Sanderson name, Cockrell said, but it will be private, so its shares will no longer be traded on NASDAQ.
The timing for the transaction was right, he said, because “poultry consumption was strong as people returned to the world post-pandemic” and the company’s “performance was outstanding,” plus “we found good partners.”
The purchase price of $203 per share was a 30.3-percent premium on the share price of $155.74 on June 18, which was the last full day of trading prior to media speculation about the potential sale of Sanderson Farms.
“At Cargill, we are committed to nourishing the world in a safe, responsible and sustainable way,” CEO and Chairman David MacLennan said in a press release immediately after the deal was announced. “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 prod- ucts 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 commod- ities investment portfolio since 1965, has roots in the poultry industry that go back more than a century.
Wayne Farms LLC is a U.S. poultry producer that is a subsidiary of Conti- nental Grain Company. It owns and operates fresh and further-processed facilities throughout the Southeast and employs more than 9,000.
Sanderson CEO and Chairman Joe Frank Sanderson Jr. said he is confident that the deal will be good for employees and customers.
“This transaction ... 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,” Sanderson said in a press release. “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.”