Cargill and Continental Grain Company to acquire chicken producer Sanderson Farms in US$4.53B deal

10 Aug 2021 --- There is a flurry of acquisition activity within major meat sectors worldwide – the latest being Cargill and the Continental Grain Company moving to buy chicken producer Sanderson Farms. The deal brings together very well-established players and represents a total equity value for Sanderson Farms of US$4.53 billion. It will see Cargill expanding its poultry operations to the US.

Upon completing the transaction, Cargill and Continental Grain will combine Sanderson Farms with Wayne Farms – a subsidiary of Continental Grain – to form a new, privately held poultry business.

According to Cargill, this combination will create a US poultry company with a high-quality asset base and complementary operating cultures.

The transaction is expected to close by the end of this year or early 2022 and will be subject to regulatory and Sanderson Farms stockholder approval and other customary closing conditions.

When the transaction is completed, Sanderson Farms will become a private company, and its shares will no longer be traded on NASDAQ.

The acquisition consortium has committed equity and debt financing in place to complete the transaction.

New joint venture to be formed
The new company will be well-positioned to enhance its service to customers across retail and foodservice and drive organic growth in an industry fueled by affordability and key consumer trends around the health, sustainability and versatility of chicken.

It will have state-of-the-art operations, including poultry processing plants and prepared foods plants across Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina and Texas.

“We are committed to nourishing the world in a safe, responsible and sustainable way,” says David MacLennan, chairman and CEO of Cargill. 

“Expanding our poultry offerings to the US 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.”

Industry roots
Cargill expects to support the new joint venture with its longstanding relationships with retail and foodservice 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.

Wayne Farms CEO Clint Rivers will lead the combined company.

“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 which contribute to our success,” says Joe Sanderson, chairman and CEO of Sanderson Farms.

“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,” he continues

“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.”

JBS acquires salmon business
This deal comes on the heels of Brazilian meat giant JBS making a bold move into the aquaculture space with an agreement to acquire 100 percent of Huon Aquaculture, Australia’s second-largest salmon producer. 

The deal, with an implied equity value of US$315 million and an enterprise value of US$403 million, has already been approved by the controlling shareholders and is expected to be concluded by the end of the year, with the approval of the other shareholders and the Australian authorities.

Valeo Foods to acquire UK meat snacks producer 
Meanwhile, Dublin-headquartered Valeo Foods, a fast-growing international ambient food group and owner of brands Rowse honey, Kettle crisps and Jacob’s biscuits, has agreed to acquire New World Foods Europe (NWFE), a UK meat snacks producer, from the Australian, based FMCG entrepreneur Tony Quinn.

Valeo Foods, a portfolio company of CapVest Partners LLP, was also recently acquired by Bain Capital Private Equity, and the transaction is due to close in the coming weeks. 

Valeo Foods has expanded rapidly since forming in 2010, and NWFE marks its 19th acquisition, creating a major international food business across the UK, Ireland and Continental Europe, generating annual revenues of over €1.2 billion (US$1.4 billion). 

The Group’s diversified products, sold in over 106 countries worldwide, include numerous heritage brand leaders in key growth categories like snacking & sweet treats, confectionery, health & wellness, baking & meal ingredients and food service. The UK is Valeo Foods’ biggest market, accounting for just over half of current revenues.

Ambitious growth strategy
NWFE will become part of the Valeo Foods Snacking Division headed by Ashley Hicks, including Kettle Foods, Tangerine Confectionary, Big Bear and Its All Good.

“NWFE is a great addition to our expansive portfolio of leading food brands and is consistent with our ambitious growth strategy,” says Seamus Kearney, Group CEO, Valeo Foods.

“The acquisition of NWFE adds a new and very strong dimension to our snacking business, and we are very excited about the growth potential of NWFE’s portfolio of on-trend protein snacks and the opportunity to further develop the meat snacks category.”

James Newitt, NWFE managing director, adds how Valeo Foods is “the perfect strategic fit to leverage further distribution opportunities in all channels, particularly International and Convenience, as well as benefit from a more holistic and localized ownership.” He also identifies how the deal will accelerate growth and include “exciting NPD.”

By Gaynor Selby