According to The Wall Street Journal, Sanderson Farms (SAFM) the third largest U.S. broiler producer has engaged Centerview Partners to advise on a possible acquisition by multinational Continental Grain, owner of seventh-ranked Wayne Farms. Sanderson Farms previously rejected a $142 per share offer from Durational Capital Management in October 2020
On release of the news Sanderson shares soared, having closed closing at $166.58 on Monday 21st June to open at $185.62 on Tuesday 22nd June. As of 10H00 EDT Sanderson market capitalization attained $4.1 Billion. The shareholding is distributed in the proportion of 10.0 percent insiders and 82 percent institutions.
The transaction if finalized will undergo Federal scrutiny but will probably be approved since a merger with Wayne Farms will still place the combination behind industry leader Tyson Foods and second-ranked Pilgrim’s Pride. The combination would provide synergy and allow the combined enterprise to benefit from the international and comprehensive scope of Continental Grain.
SAFM has traded over the past 12 months in the range of $108.57 to $185.62 with a 50-day moving average of $167.23. On a trailing 12-month basis SAFM has returned 8.5 percent on assets and 11.6 percent on equity. The company posted an operating margin of 7.0 percent and a profit margin of 4.2 percent over the past 12 months. For the most recent 2nd Quarter of FY 2021 ending April 30th SAFM earned $96 million on sales of $1.13 Billion