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$4.53B Sanderson Farms Deal Faces DOJ Roadblock

Joint venture plans to purchase Mississippi-based poultry producer Sanderson Farms Inc. have hit a roadblock with the U.S. Department of Justice, resulting in a “second request” for information and pause of the merger review clock as the agency further investigates the details of the deal.

Sanderson FarmsPhoto Credit: Shutterstock

Food and agriculture companies Cargill and Continental Grain are joining up to purchase Sanderson Farms for $203 per share, a premium of 30.3% over the target’s closing price on June 18. At the time, Cargill and Continental Grain stated they intended to integrate Sanderson into a specific Continental Grain subsidiary, Wayne Farms.

SEC filings Tuesday by Sanderson disclosed that it and its parent company, Walnut Sycamore Holdings LLC, received a second request from the Justice Department relating to the transaction, further delaying progress of the deal.

The transaction was announced in August of this year. The two companies notified the Federal Trade Commission and DOJ of their proposed agreement on October 18 per the Hart-Scott-Rodino Antitrust Improvements Act. Walnut Sycamore withdrew its premerger notification, then refiled it a month later on Nov. 19.

On Monday, Sanderson and Walnut Sycamore received the second request from the department. The HSR Act allots 30 days for the government to respond to a notification, however the second request adds an additional 30 days to that period.

The companies said they expect the merger finalization in the first half of 2022.

The proposed business unit will include prepared food facilities and poultry processing plants across Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina and Texas.

The Depatment of Justice has made it a point to crack down on the poultry as of late, having launched a criminal investigation related to price-fixing in the broiler chicken industry that is still ongoing. To this point, the probe has resulted in the indictments of two companies, Koch Foods Inc. and Claxton Poultry Farms as well as 14 individuals in less than a year.

“Big Chicken” scored another victory against the DOJ Thursday when a Colorado federal jury deadlocked and resulted in a mistrial. 10 poultry executives were accused of participating in a complex plot to fix the price of chicken and rig bids in the United States chicken market.

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Source: https://www.law360.com/articles/1450803

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