Joint venture formed to buy Sanderson Farms
This week, Cargill announced is going to join Continental Grain in a bid to acquire Sanderson Farms, US third-largest poultry producer. The deal is worth $4.5 billion and although no timeframe has been announced to close the deal, executives of both companies involved in this joint venture are talking about expanding their operations in the US poultry market.
Cargill is already involved in the poultry industry, with units operating in North America, Asia, Latin America and Europe. "Expanding our poultry offerings to the US is a key enabler of our ability to meet customer and consumer demands," David MacLennan, chief executive of Cargill, said in a statement.
Cargill is one of the largest producers of beef and turkey in the American market. The company sold its US pork business in 2015 to JBS USA. The joint venture buyers will combine Sanderson Farms with Wayne Farms, an existing poultry subsidiary of Continental Grain. Once Wayne and Sanderson are merged it will have plants in Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina and Texas.
If approved by regulators, the combined company would control nearly 15% of the US broiler production, according to data from Watt Poultry USA. Tyson Foods accounts for one-fifth of production, followed by Pilgrim's Pride, with 16% of the nation's output. Chicken prices have surged in recent months on the reopening of restaurants and the new chicken products at fast-food restaurants. This has led to a shortage of various chicken parts, including wings, and put pressure on prices, reported Star Tribune.
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