By Dhirendra Tripathi
Investing.com -- Sanderson Farms (NASDAQ:SAFM) stock was up 7% in Monday’s premarket trading on a report in The Wall Street Journal that the chicken producer is nearing a deal to sell itself to Cargills (CM:CARG) and agricultural-investment firm Continental Grain in a deal worth around $4.5 billion.
It would value Sanderson at $203 a share, an 11.3% premium to the poultry giant’s Friday closing of $182.37.
Cargill is one of the world’s biggest processed food companies, selling its own brands, besides also trading in grains, oilseeds and meat.
Continental Grain owns a smaller chicken processor Wayne Farms. A deal will give the Sanderson-Wayne combine a market share of about 15% of U.S. chicken production, according to the WSJ report. Tyson Foods (NYSE:TSN) dominates the market.
Prices of chicken products have risen as the economy has reopened. Wholesale breast prices have doubled in the last seven months and wing prices have touched record highs, according to data from U.S. Department of Agriculture.