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Sanderson Farms (SAFM) Unveils Plans to Sell its Business

Sanderson Farms (SAFM) will sell its business to a joint venture between Cargill and Continental Grain for $203 per share on a cash basis.

This story originally appeared on Zacks

Sanderson Farms, Inc.‘s SAFM shareholders have approved the earlier-announced deal (on Aug 9, 2021) for a joint venture between Cargill and Continental Grain to buy Sanderson Farms. The transaction, which is likely to conclude in the fourth quarter of 2021 or the first quarter of 2022, is priced at $203 per share on a cash basis.

Post the completion of the deal, Continental Grain and Cargill will merge Sanderson Farms with Wayne Farms — a subsidiary of Continental Grain, to create a new, privately-held poultry business. The envisioned deal will enhance value for Sanderson Farms’ stakeholders that include employees, customers and poultry producers. Management highlighted that it remains committed toward delivering superior quality poultry products as well as services.

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What Else Should You Know?

Sanderson Farms is working toward boosting its assortments to meet consumers’ altering tastes and dining preferences. In this context, the company has been striving to expand its tray pack offerings. Additionally, the company is investing toward strengthening its overall capacity. For the first nine months of fiscal 2021, capital expenditures amounted to nearly $126.7. For fiscal 2021, the company’s capital budget is nearly $195 million, as on Aug 17, 2021. Of that total, it expects to incur nearly $10.1 million with respect to the new hatchery in Mississippi, around $46.4 million on building and equipment upgrades along with $12.5 million to buy new vehicles.

Prior to this, the company constructed a poultry processing complex in Tyler, TX. The facility, which started operations in fiscal 2019, includes a feed mill, hatchery, wastewater treatment facility and a processing plant with the capacity to process 1.3 million chickens per week.

Apart from this, Sanderson Farms has been strengthening the portfolio by adding to its vast product pipeline. The company is known for its processed and prepared chicken products available in varied sizes that are also sold in foreign markets like Mexico, the Middle East and Central Asia.

Shares of this Zacks Rank #1 (Strong Buy) company have gained 17.3% in the past six months against the industry’s decline of 2.3%.

Other Solid Food Picks

United Natural Foods, Inc. UNFI, currently sporting a Zacks Rank #1, has a trailing four-quarter earnings surprise of 13.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Kraft Heinz Company KHC, currently carrying a Zacks Rank of 2 (Buy), has a trailing four-quarter earnings surprise of 11.5%, on average.

General Mills, Inc. GIS, currently carrying a Zacks Rank of 2, has a trailing four-quarter earnings surprise of 7.3%, on average.

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