24 C
Munich
Tuesday, July 27, 2021

Sanderson Farms Explores Sale – WSJ

Must read

GE and Raytheon Aren’t Yet Flying on All Engines

Jet engines are roaring back to life, but shouldn’t yet be declared ready for takeoff. ...

Canada at the Tokyo Olympics: Who’s competing Tuesday night, Wednesday morning – National

Canadian athletes will be busy competing in several events at the Tokyo Olympics Wednesday, including rowers and swimmers looking to come out on top...

CDC expected to revive some masking guidelines

The nation’s top health...

Poultry giant

Sanderson Farms Inc.

SAFM 6.96%

is exploring a sale, according to people familiar with the matter, as demand for chicken products rises.

Sanderson Farms has tapped Centerview Partners for advice on the potential sale and has attracted interest from suitors including agricultural investment firm Continental Grain Co., which owns a smaller chicken processor, the people said. The process may not result in a sale.

Mississippi-based Sanderson, the third-biggest U.S. chicken producer by processing capacity, had a market value of around $3.5 billion Monday afternoon, and a buyer would be expected to pay a premium to that.

Demand for chicken breasts, wings and other products has increased as pandemic restrictions lift and restaurants reopen, boosting sales and prices. At the same time, consumers have continued spending more on groceries as many are still working from home. The cost of boneless, skinless chicken breast has more than doubled since the beginning of the year and wing prices have hit records.

That helped Sanderson report better-than-expected sales and profit last month.

Meat companies’ costs are also rising. Grain prices—typically the biggest expense in raising poultry—have jumped over the past year, pushed higher by growing exports to China and poor weather for South American farmers. Labor shortages in the rural areas that are home to major meat plants have forced poultry producers to increase wages and expand benefits to recruit and retain workers. Some companies, including Sanderson, are making fresh investments in automation.

The U.S. chicken industry is dominated by a handful of big players including

Tyson Foods Inc.,

which processes about one-fifth of the country’s poultry, according to research from Watt Poultry USA.

A deal with Continental would merge Sanderson with Georgia-based Wayne Farms LLC, a poultry producer owned by Continental, forming a company producing about 15% of the country’s chicken meat. No. 2 player

Pilgrim’s Pride Corp.

produces about 16% of the national total.

Sanderson in October 2020 said it rejected an unsolicited takeover approach from Durational Capital Management that the chicken producer said was too low.

Sanderson was founded in 1947 as a farm-supply store.

Joe Sanderson,

the grandson of founder D.R. Sanderson, has served as the company’s chief executive since 1989 and chairman since 1998.

Wayne Farms traces its roots to a feed-milling company founded in 1895 that expanded into poultry and was acquired by Continental in 1981. The firm in 2015 filed plans to raise $234 million in an initial public offering for Wayne, with part of its growth strategy to consolidate smaller private and family-owned chicken companies, according to documents filed with U.S. securities regulators. Continental withdrew the IPO plan as the U.S. poultry industry contended with avian influenza outbreaks that killed millions of birds and boosted costs for poultry and egg companies.

The U.S. poultry industry is facing scrutiny from the U.S. Department of Justice’s ongoing criminal investigation into allegations that executives at major chicken companies conspired to fix prices. No one at Sanderson or Wayne has been charged.

Write to Jacob Bunge at jacob.bunge@wsj.com and Cara Lombardo at cara.lombardo@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest article

GE and Raytheon Aren’t Yet Flying on All Engines

Jet engines are roaring back to life, but shouldn’t yet be declared ready for takeoff. ...

Canada at the Tokyo Olympics: Who’s competing Tuesday night, Wednesday morning – National

Canadian athletes will be busy competing in several events at the Tokyo Olympics Wednesday, including rowers and swimmers looking to come out on top...

CDC expected to revive some masking guidelines

The nation’s top health...

UPS Ships Fewer Packages as Pandemic Boom Wanes

United Parcel Service Inc. posted a 14.5% increase in second-quarter sales despite shipping...