Big chicken is reportedly on the verge of plumping up.
And all the investors said, “It’s about time.”
Refresher: Last August, Sanderson Farms announced a “joint venture” between Cargill and Continental Grain Co. to acquire the country’s third largest poultry firm for $4.5B.
When completed, Sanderson would merge with Continental’s subsidiary, Wayne Farms, to form a new operation.
Cargill and Continental Grain have been chomping at the bit (er… uh… pecking at the fence?) for months waiting for the deal to go through—originally scheduled for late last year.
But… they ran into some chicken wire.
Hold your horses chickens: Keeping in line with the Biden administration’s quarrel with big meat, the U.S. Department of Justice launched an antitrust review ahead of the acquisition back in December that put the deal on hold.
But now, it seems the DOJ is ready to talk turkey chicken.
Concession session: According to unnamed sources, the DOJ seems poised to allow the deal… as long as some not-so-minor industry changes are made.
One suspected concession centers around scrapping the so-called “tournament” grower payment system. According to the USDA: “Processors… determine the payments that poultry growers receive… by weighing the chickens and ranking farmers based on how much the chickens grew. Pay is generally determined based on how a farmer compares to other farmers.”
If required, there is concern among chicken folks that the change could give companies with more traditional payment models a competitive advantage.
Where this goes: If all parties sign off and the deal goes through, the new entity will represent 15% of U.S. poultry production.