The big are getting bigger. In August 2020, a joint venture of Cargill and Continental Grain Co. (Conti) announced its intent to purchase Sanderson Farms Inc. for $4.53 billion. The deal would make Wayne Farms LLC (a Conti subsidiary) the third-largest chicken company in the United States and one of the largest in the world.
A new rival to the big two
The Sanderson-Wayne company would have processed 14.5% of the 984.74 million pounds of ready-to-cook (RTC) chicken processed by the top 32 broiler companies covered in WATT Global Media’s annual industry rankings in 2020. The new big three of Tyson Foods Inc., Pilgrim's Pride Corp. and Sanderson-Wayne would have handled 41.8% of domestic production.
This move grows Conti’s sizable international food portfolio and gives Cargill, already a major player in turkey and beef production, a relatively large position in the chicken industry, too.
Growth through acquisition
The transaction also follows with the wider poultry industry trend of consolidation. In the past three decades, the industry narrowed from smaller, regional producers to large, national and international companies. Armed with capital and hungry for growth, larger companies purchase smaller ones and expand operations.
According to WATT Global Media data, 46 companies included in WATT PoultryUSA’s top broiler companies produced 581.7 million pounds of RTC chicken on a weekly basis. In 2020, 32 companies processed 69.3% more chicken.
A regulatory question
I believe consolidation will continue as far into the future as U.S. regulators allow it to happen. In the modern history of the U.S., governments passed through cycles of laissez-faire attitudes toward big business and crusades to break monopolies.
In recent decades, regulators were relatively lax toward mergers and acquisitions focusing power in major industries. This suggests one day we could see the political pendulum swing back the other way if voters become concerned about broader consolidation in corporate America.
Par Austin Alonzo (20/08/2021)
Source : wattagnet.com
Photo : vecteezy.com