Cargill Inks $4.5B Deal to Buy U.S. Chicken Producer

Cargill Inks $4.5B Deal to Buy U.S. Chicken Producer

The Minnesota-based agricultural giant says it is forming a joint venture to buy Mississippi-based Sanderson Farms.

Minnetonka-based agribusiness giant Cargill Inc. is jumping into the U.S. chicken market.

On Monday, the company announced that it is teaming up with New York-based Continental Grain Co. to buy chicken producer Sanderson Farms for $4.5 billion.

Cargill does supply chicken products in Europe, Asia Pacific, Latin America, and Canada, but not in the U.S. The deal, if approved by federal regulators, would mark Cargill’s entry into domestic chicken production. It would also boost Cargill’s profile as a major protein producer; the company is already one of the biggest suppliers of beef and turkey in the U.S.

Sanderson is the third-biggest chicken producer in the United States, according to poultry industry trade magazine Watt Poultry USA. Tyson Foods and Pilgrim’s Pride are the first- and second-largest.

As part of the deal announced Monday, Cargill and Continental Grain will form a joint venture to purchase Sanderson, which is publicly traded on Nasdaq. The deal also means that Sanderson will become a private company.

Wayne Farms — Continental Grain’s own chicken producing subsidiary — would also merge with Sanderson.

Chicken farming in the U.S. is big business. In its 2020 fiscal year, Sanderson reported net sales of $3.56 billion, up from $3.44 billion in the prior year. As restaurants reopen, demand for chicken products has soared, and so have prices. Citing data from the U.S. Department of Agriculture, The Wall Street Journal reported that wholesale breast prices are now about double what they were at the start of the year.

“Expanding our poultry offerings to the U.S. is a key enabler of our ability to meet customer and consumer demands,” said Cargill chairman and CEO David MacLennan in a news release. “With these great businesses, and our strong partnership, we believe we will deliver a superior portfolio of products and services to our customers.”

According to the release, the combined chicken company will have operations in Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, and Texas.

In June, The Wall Street Journal reported that Sanderson was considering a sale. The paper specifically highlighted Continental Grain as a prospective buyer, but not Cargill.

Continental Grain is an investor in food and agricultural businesses, including Caribou Coffee parent company JAB Holding Co. The company also invests in Restaurant Brands International, owner of Burger King and Popeyes.