February 3, 2022
Sanderson Farms and Wayne Farms chicken deal could be affected by Biden antitrust efforts and inflation concerns
Cargill Inc and Continental Grain Co's plans to merge Sanderson Farms and Wayne Farms, two major chicken processors in the country, could fall apart due to US President Joe Biden's antitrust efforts and inflation concerns, Reuters reported.
The deal was in discussion even as the US Labor Department said the country's inflation was at its highest in 40 years.
Biden's administration announced in early January that it will spend US$1 billion and introduce new regulations to address a lack of competition in meat processing, following concerns of price hikes in the meat industry.
According to two people familiar with the matter, Wayne and Sanderson combined have a market share of 13.5%, not as big as is often seen in merger challenges.
Cargill and agricultural investor Continental Grain announced plans to purchase Sanderson Farms in August 2021 at US$4.53 billion.
Both sides of the political divide have expressed concerns over the deal. Senators Chuck Grassley, a Republican, and Elizabeth Warren, a Democrat have called on the US Justice Department to investigate the proposed deal as it might increase prices.
According to a Tyson investor fact book from the 2019 fiscal year published in 2020, Tyson Foods is the US chicken market leader at 21%, followed by Pilgrim's Pride at 17% and Sanderson Farms at 10%. Perdue and Koch Foods are fourth and fifth at 7% and 6%, respectively
- Reuters