The U.S. economy has experienced immense inflation over the last year, but some products stick out like a sore thumb. One of them is chicken, which increased in price by 87 percent YoY by April 2021. Sanderson Farms (NASDAQ:SAFM) is one of the largest producers of poultry in the nation (behind only Tyson Foods and Pilgrim's Pride), and its heightened chicken prices have led to a major acquisition.
Cargill and Continental Grain have plans to purchase Sanderson Farms for a massive amount of money. Where are the company's various locations, and what's going to happen to SAFM stock moving forward?
Sanderson Farms sold to Cargill and Continental Grain for $4.5 billion
In a deal finalized on Aug. 9, Sanderson Farms was sold for $4.53 billion to Cargill and Continental Grain.
The deal is all cash and values one share of Sanderson Farms stock at $203. That's slightly higher than the stock's current market value, which provides it with a $4.37 billion market cap.
Sanderson Farms got its value from high production rates. The company processed a reported 13.65 million chickens per week. Founded in 1947 and listed on the public market since 1987, the company has come a long way since its early days of trading shares at $6.22 a pop.
Where are Sanderson Farms' locations?
Sanderson Farms is headquartered in Mississippi and is actually the only Fortune 1000 company located in the state.
The company's other locations are scattered throughout the southeastern U.S. Sanderson currently has 33 locations in five states (Mississippi, Louisiana, Texas, North Carolina, and Georgia).
Sanderson Farms' locations include:
Adel, Ga.: Feed mill and hatchery
Bryan, Tex.: Hatchery and processing plant
Collins, Miss.: Hatchery, processing plant, and feed mill
Easterly, Tex.: Feed mill
Flowood, Miss.: Processing plant
Hammond, La.: Processing plant
Hazlehurst, Miss.: Hatchery, processing plant, and feed mill
Kinston, N.C.: Hatchery, processing plant, and feed mill
Laurel, Miss.: Hatchery, processing plant, and feed mill
Lindale, Tex.: Hatchery
McComb, Miss.: Hatchery, processing plant, and feed mill
Mineola, Tex.: Feed mill
Moultrie, Ga.: Processing plant
Palestine, Tex.: Hatchery, processing plant, and feed mill
St. Pauls, N.C.: Hatchery and processing plant
Tyler, Tex.: Processing plant
Waco, Tex.: Hatchery and processing plant
Neither Cargill nor Continental Grain have public stock
Cargill is the largest privately held company in the U.S. and is largely owned by Cargill family heirs. The company's lucrative acquisitions in the agricultural and processed foods markets have lent it more than $120 billion in annual revenue. Going public remains a no-go for Cargill executives due to the company's immense size and varied assets (something that hasn't kept large players like P&G out of the public domain).
Cargill employees have pushed for public stock numerous times, but the family has managed to keep the equity close to the chest.
Continental Grain is also privately held. Following the acquisition, Sanderson Farms is set to merge with a Continental Grain subsidiary called Wayne Farms.
What will happen to SAFM stock?
Given the fact that Sanderson will merge with Wayne Farms, investors want to know what will happen to SAFM stock.
Sanderson Farms will become privately held under the new deal, assuming SAFM shareholders approve the payout. Both Sanderson and Wayne were a part of the U.S. Department of Justice investigation in 2019 on antitrust violations for fixing chicken prices over the course of eight years, but neither company has received official charges.