Rivers weighs in on Wayne Farms, Sanderson merger

A new, combined Wayne Farms and Sanderson Farms will make a better company together than they were separately, according to the chosen leader of the new joint venture between Continental Grain Co and Cargill.

Clint Rivers (Wayne Farms)
Clint Rivers (Wayne Farms)

A new, combined Wayne Farms LLC and Sanderson Farms Inc. will make a better company together than they were separately, according to the chosen leader of the new joint venture between Continental Grain Co and Cargill.

In an interview with WATT Global Media, Wayne Farms Chief Executive Officer Clint Rivers spoke publicly about the deal which, if approved, will create a new, privately owned chicken company capable of processing more than 143 million pounds of ready-to-cook chicken on a weekly basis.

Inside the deal 

In August 2021, a joint venture of Cargill and Continental Grain Co. (Conti), the owner of Wayne Farms, reached an agreement to buy Sanderson Farms for $4.53 billion. At the time, the joint venture announced Rivers would lead the new combined integrated poultry company.

Conti is a privately owned, global investor, owner and operator of companies. Beyond Wayne Farms, its portfolio includes: Keurig Dr Pepper Inc., Panera Bread, The Kraft Heinz Co., Restaurant Brands International Inc., Krispy Kreme Doughnut Corp., BFG Partners, Idaho Pacific Corp. and Impossible Foods Inc.

Cargill provides data analytics, market expertise, risk management and financial solutions. It produces animal nutrition and health products, food ingredients, animal protein, branded foods and bio-industrial products. It ships materials by road, rail, river and sea. Internationally, the company is involved in a range of both direct investments with other capital firms and venture capital operations. It mills feed and flour and produces poultry and hogs in Latin America and the Caribbean. It is also active in feed milling, animal husbandry and meat production and processing in China.

Motivations for Conti and Cargill

Rivers said Wayne Farms long examined growth through acquisition and Sanderson was a prime target due to its compatibility with the existing business and ability to place it in the retail market.

“It's an opportunity to build a best-in-class operator that we believe is going to bring a lot of benefits to consumers, customers and our growers, and help us to be an even more competitive company than we are today,” Rivers said.

When the opportunity arose to make the purchase, Conti looked for a partner to divide the expense and found a match in Cargill. The Minneapolis-based agriculture company is already a major producer of turkey in the U.S. and it was looking for an opportunity to get back into the U.S. chicken market.

Cargill is a major producer of turkey in the U.S. and is involved in numerous poultry operations overseas. Rivers said Cargill will benefit from Wayne Farms’ existing domestic poultry industry knowledge and experience. He said the company did not have U.S. chicken in its portfolio and wanted to add it. The U.S. chicken industry is seeing consistent growth in both domestic and international demand, which is forecast to grow.

The new company 

The deal is expected to close by the end of 2021 or early in 2022, Rivers said. The new operation does not yet have a name or a brand, he said, but it will be announced once the deal closes.

The company will be a joint venture with its own board of directors and management team. It will operate as an independent company with two, 50% owners and board members representing both Conti and Cargill. The headquarters of the new operation is not yet determined. It will own 21 hatcheries, 16 feed mills, 21 slaughter facilities, four raw further processed facilities and two cooked product facilities, according to WATT Global Media data.

There is little overlap in existing operations, Rivers said, which was one of the factors in the decision. However, both Wayne Farms and Sanderson operate near Laurel, Mississippi. In October 2021, Wayne Farms sold its fresh poultry processing complex in Laurel to Amick Farms.

Communication is ongoing with existing management and staff at both companies about how the merger may affect them. Rivers said the deal is not expected to affect grower contracts nor have an immediate impact on the total U.S. production of ready-to-cook chicken.

The first goal, Rivers said, will be to take care of the customers and grow the business.

“Our sales group just has gotten some feedback from customers that are excited about the potential to expand our product offerings, and also meet their growth needs,” Rivers said.  “We’ve got several quick-serve restaurant customers who have got some really aggressive growth planned for this next year building new stores so they're hoping that we'll be able to meet their demand.”

Corporate culture

A new company, Rivers said, will retain the hunger for growth exhibited by Sanderson and Wayne in the past and will be guided by the principles of people, planet, animal welfare and food safety.

Since 1993, Sanderson built eight new poultry plants. Most recently, it opened a $225 million poultry complex in Tyler, Texas, in February 2019. Rivers said the new company will continue to prioritize growth, but it will depend upon market demand. Growth could look like organic expansion of existing facilities or construction of new facilities, depending upon the need.

In the past, Sanderson and Wayne Farms differed on their views on antibiotics in poultry growing. Rivers said going forward, the company will retain Wayne Farms’ policy of providing for the customers practical demands on issues like antibiotics use and animal welfare.

If the customer wants no antibiotics ever products, he said, then the new company will look for ways to meet that demand. Wayne Farms launched antibiotic-free (ABF) production in 2015. In 2019, Rivers said the company’s production was about 60% ABF.

As for animal welfare, that issue will be central to company.

“We plan to deliver the highest quality products with the highest quality care in the industry,” Rivers said.

Wayne Farms is a partner organization of the Global Animal Partnership (GAP), a third-party welfare standards organization linked to Whole Foods Market. It began producing birds in accordance with GAP’s welfare standards in 2017. Its standards are tiered. The lowest rung, Step 1, requires what it calls no crates, no cages and no crowding. The highest, Step 5+, requires pasture-raised animals born and slaughtered on the same farm.

In 2019, Wayne Farms launched a line of products rated GAP Step 2, meaning the birds are raised in housing with additional space, natural light and enrichments designed to stimulate them. These birds grow slower than conventional broilers (as close to a 50 grams per day growth limit as the current breed allows) and are processed using controlled atmosphere stunning.

Responding to critics 

The deal attracted direct criticism from observers in the press and in politics. Detractors say the industry is already too consolidated and this deal would further limit competition. Rivers said he believes the two companies will bring greater innovation and competition to the industry. Joining the two will make the combined company a stronger competitor with the two leading companies, Tyson Foods Inc. and Pilgrim’s Pride Corp., he said.

“I think it will bring things to our customers and consumers that they'll want,” Rivers said. “They'll want to see more, broader product offerings. We think there's a lot of opportunity with Sanderson’s retail presence for us to extend some of our brands into retail that are not there now.

We believe that we'll be able to improve customer service and be able to bring a lot of synergies by implementing best practices that will make us more competitive. We'll be focusing on doing those things that, I think, will make a better company together than we are separately.”

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