The proposed sale of Sanderson Farms is being investigated by Monteverde & Associates, a national class action securities litigation law firm.
Monteverde & Associates, in a press release dated September 13, announced that the focus on the investigation is to find out whether Sanderson Farms and its board of directors violated securities laws and/or breached their fiduciary duties to the company by failing to conduct a fair process and/or whether the transaction is properly valued.
On August 9, it was announced that Cargill and Continental Grain Company reached an agreement with Sanderson Farms in which Cargill and Continental Grain would form a joint venture and acquire Sanderson Farms for $4.53 billion, or $203 per share.
If the acquisition comes into fruition, Sanderson Farms would merge with Wayne Farms, a poultry integrator owned by Continental Grain.
Sanderson Farms is currently the third largest poultry company in the United States, while Wayne Farms is the seventh largest. If the two companies combine, the consolidated business would process 143.11 million pounds of ready-to-cook chicken on a weekly basis, about 18.5 million less pounds per week than Pilgrim’s Pride, the second-largest poultry company in the United States.
The proposed transaction is expected to become finalized by the end of 2021 or in early 2022.
The pending Sanderson Farms acquisition has found other critics. In late August, the Minnesota Farmers Union (MFU) voted unanimously to go on record in opposition to the deal. MFU said it believes in an open and competitive marketplace where family farmers can thrive, and that industry consolidation often leads to families to leave their farms.
Also, Sen. Chuck Grassley, R-Iowa, wrote to the U.S. Department of Justice, urging the industry to thoroughly scrutinize the proposed transaction.
“I am concerned that continued mergers and acquisitions in an already concentrated poultry industry will increase consolidation, frustrate competition and reduce marketing options. I also am concerned about the impact on consumer choice and price of poultry products,” Grassley wrote.
