Sanderson, Wayne Farms merger delayed

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Source: Food Dive

In a new SEC filing, Sanderson Farms said it still expects the deal to close but not in its expected timeframe of mid-2022.

Sanderson Farms said that while it still expects its merger with Wayne Farms to be completed, it no longer expects the deal to close in the first half of 2022, according to its filing with the U.S. Securities and Exchange Commission on Wednesday.

The poultry company also said the businesses are “still working to satisfy the other conditions” to close the deal. However, it stated there “can be no assurance” the companies will satisfy closing conditions of the merger or that the deal will close before the end date in the merger agreement of Aug. 8, 2022, which was set in a previous SEC filing.

The merger has stalled as the Department of Justice’s antitrust division continues to scrutinize its terms. Last December, the DOJ issued a “second request” to the companies asking for more information about the deal, Sanderson Farms revealed in an SEC filing.

Cargill and Continental Grain agreed to purchase Sanderson Farms for $4.53 billion last August with plans to merge it with Continental’s Wayne Farms subsidiary to create a new privately held company. Combined, it would become the third-largest poultry processor in the U.S. Sanderson previously said in a March filing it expected the deal to go through by the end of the first half of calendar year 2022.

The DOJ has not yet announced the status of the merger. If the government nixes the deal, the companies could be prepared to fight the decision in court, according to a Seeking Alpha report on Tuesday citing Dealreporter. Sanderson Farms would be expected to ask for more favorable terms for the purchase, the report said. Sanderson did not respond to a request for comment ahead of press time.

There were other signs the merger’s close could be delayed. On June 21, Nasdaq published an alert stating the deal would close on June 23, but then issued a notice stating the closing was still yet to be determined, Seeking Alpha reported.

The new company faces an uphill battle to passing regulatory approval, as the Biden administration has publicly targeted concentration in the meat industry and prominent Democrats like Sen. Elizabeth Warren (D-Mass.) have called out meat processors for raking in record profits amid inflation.