Cal-Maine Foods, Inc. Announces a Definitive Agreement to Acquire Shuttered Broiler Processing Assets in Dexter, Missouri, From Tyson Foods, Inc.

Rhea-AI Summary

Cal-Maine Foods, Inc. (NASDAQ: CALM) announced the acquisition of a broiler processing plant, hatchery, and feed mill in Dexter, Missouri from Tyson Foods, Inc. The assets will be repurposed for egg and egg products production, with the broiler processing plant to be converted into an egg grading facility. The transaction is expected to close in the third fiscal quarter.

Insights

Market Research Analyst

Cal-Maine Foods' acquisition of the recently closed Tyson Foods facilities represents a strategic expansion within the poultry industry. By repurposing the broiler processing plant, hatchery and feed mill for egg and egg products production, Cal-Maine is diversifying its operational capabilities. This move is likely to enhance the company's production efficiency and product range, potentially leading to increased market share within the egg production sector.

The acquisition could also signify a shift in consumer demand patterns or a strategic response to supply chain challenges. Given the scale of Cal-Maine Foods, this development might put pressure on smaller competitors who lack the resources to expand or diversify operations at a similar pace. For investors, the key metrics to watch in the coming quarters would be the integration costs, time to operational efficiency and the impact on Cal-Maine's revenue and profit margins.

Financial Analyst

The financial implications of this acquisition are multifaceted. Cal-Maine Foods' decision to invest in these assets during their third fiscal quarter could indicate a strong cash position and a strategic use of capital. Investors should consider the acquisition's impact on the company's balance sheet, including any incurred debt and the long-term return on investment. The repurposing of the plant for egg production may lead to significant capital expenditures upfront, but could also result in cost savings and increased production capacity in the long run.

It is crucial to analyze how this expansion aligns with Cal-Maine's growth strategy and how it is expected to contribute to earnings. The market's reaction to this news will hinge on the perceived value of the transaction and its alignment with the company's long-term strategic goals.

Supply Chain Expert

The acquisition of Tyson Foods' closed facilities by Cal-Maine Foods is a notable event in terms of supply chain management. The conversion of the broiler processing plant to an egg grading facility suggests that Cal-Maine is looking to streamline its supply chain by bringing more stages of production in-house. This could lead to improved supply chain resilience, a reduction in dependency on external suppliers and potentially lower transportation costs.

Furthermore, owning a hatchery and feed mill could give Cal-Maine greater control over the quality and cost of these critical inputs. The long-term benefits may include more stable egg production and pricing, which can be a competitive advantage. However, the short-term challenges may involve managing the complexities of integrating these new assets into the existing supply chain and ensuring they meet Cal-Maine's standards for efficiency and productivity.

RIDGELAND, Miss.--(BUSINESS WIRE)-- Cal-Maine Foods, Inc. (NASDAQ: CALM) (“Cal-Maine Foods” or the “Company”), the largest producer and distributor of fresh shell eggs in the United States, today announced a definitive agreement to acquire a broiler processing plant, hatchery and feed mill in Dexter, Missouri, that were recently closed by Tyson Foods, Inc. (NYSE: TSN) (“Tyson”). The Company plans to repurpose the assets for use in egg and egg products production. Cal-Maine Foods expects to close the transaction in its third fiscal quarter.

Cal-Maine Foods will initially convert the broiler processing plant to an egg grading facility. The Company is excited about the growth prospects from this new operation, and, subject to the completion of the transaction, anticipates making additional investments in the facilities and community and creating new jobs. Potential future expansion includes egg products processing capabilities, such as hard-cooked eggs. In connection with the acquisition, Cal-Maine Foods expects to enter into agreements with certain of Tyson’s former contract farmers to convert their operations to support Cal-Maine Foods’ cage free, free range, or pasture raised egg production operations.

Commenting on the announcement, Sherman Miller, president and chief executive officer of Cal-Maine Foods, Inc., stated, “We are pleased to announce the proposed acquisition of the assets of Tyson’s former broiler processing facility in Dexter, Missouri. This transaction is consistent with our growth strategy to expand our business through selective acquisitions in addition to our organic growth initiatives. The Dexter location offers an important opportunity to expand our geographic footprint and enhance our ability to serve our valued customers with added production and distribution capabilities in Missouri and surrounding markets. We look forward to working with the Tyson team to close the transaction and to working with the contract growers who will support our shell egg production capabilities. As we extend our market reach, we remain focused on the efficient and sustainable management of our existing and acquired operations and meeting the demands of our customers.”

About Cal-Maine Foods

Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packaging, marketing and distribution of fresh shell eggs, including conventional, cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced eggs. The Company, which is headquartered in Ridgeland, Mississippi, is the largest producer and distributor of fresh shell eggs in the United States and sells the majority of its shell eggs in states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.

Forward Looking Statements

Statements contained in this press release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on management’s current intent, belief, expectations, estimates and projections regarding our company and our industry. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and may be beyond our control. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include, among others, (i) the risk factors set forth in the Company’s SEC filings (including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the risks and hazards inherent in the shell egg business (including disease, pests, weather conditions and potential for recall), including but not limited to the most recent outbreak of highly pathogenic avian influenza affecting poultry in the U.S., Canada and other countries that was first detected in commercial flocks in the U.S. in February 2022 and that first impacted our flocks in December 2023, (iii) changes in the demand for and market prices of shell eggs and feed costs, (iv) our ability to predict and meet demand for cage-free and other specialty eggs, (v) risks, changes or obligations that could result from our future acquisition of new flocks or businesses and risks or changes that may cause conditions to completing a pending acquisition not to be met, (vi) risks relating to increased costs, and higher and potentially further increases in inflation and interest rates, (vii) our ability to retain existing customers, acquire new customers and grow our product mix, (viii) adverse results in pending litigation matters, (ix) global instability including as a result of the wars in Ukraine and Israel and attacks on shipping in the Red Sea, and (x) any potential resurgence of COVID-19. SEC filings may be obtained from the SEC or the Company’s website, www.calmainefoods.com. Readers are cautioned not to place undue reliance on forward-looking statements because, while we believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. Further, the forward-looking statements included herein are only made as of the respective dates thereof, or if no date is stated, as of the date hereof. Except as otherwise required by law, we disclaim any intent or obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231229652930/en/

Sherman Miller, President and CEO

Max P. Bowman, Vice President and CFO

(601) 948-6813

Source: Cal-Maine Foods, Inc.

FAQ

What did Cal-Maine Foods announce?

Cal-Maine Foods, Inc. (NASDAQ: CALM) announced the acquisition of a broiler processing plant, hatchery, and feed mill in Dexter, Missouri from Tyson Foods, Inc.

What will the acquired assets be used for?

The acquired assets will be repurposed for egg and egg products production, with the broiler processing plant to be converted into an egg grading facility.

When is the transaction expected to close?

The transaction is expected to close in Cal-Maine Foods' third fiscal quarter.