WASHINGTON – The US Department of Justice (DOJ) is seeking additional information for the agency’s review a proposed acquisition of Laurel, Miss.-based Sanderson Farms by a joint venture of Continental Grain Co., New York, and Cargill, Minneapolis.
The transaction was expected to close by the end of 2021 or in early 2022, but a DOJ request for additional information and documentary material extends the mandated waiting period until 30 days after both Sanderson and parent company Walnut Sycamore Holdings LLC, have substantially complied with the DOJ’s request, unless the waiting period is terminated earlier by the DOJ or extended by agreement, according to a Securities and Exchange Commission filing (SEC).
The companies expect the merger will be completed in the first half of 2022, but if not, Sanderson could be required to pay a termination fee of $158 million to Cargill and CGC.
“If the Merger Agreement is terminated, the termination fee we may be required to pay, if any, under the Merger Agreement may require us to use available cash that would have otherwise been available for general corporate purposes or other uses,” according to the SEC filing. “The payment of a termination fee may also have an adverse impact on our financial condition and could affect the structure, pricing and terms proposed by a third party seeking to acquire or merge with us or deter such third party from making a competing acquisition proposal.”
Cargill and CGC have an agreement in place to acquire poultry processor Sanderson Farms for $4.5 billion. The acquisition will be a cash transaction in which shareholders of Sanderson Farms will receive $203 per share. The plan is to merge Sanderson Farms with Wayne Farms, a subsidiary of Continental Grain.