Cal-Maine Foods, Inc. (NASDAQ: CALM) today announced a new joint venture between Eggland’s Best, Inc., a New Jersey-based egg cooperative, and Land O’ Lakes, Inc., a national farmer-owned cooperative based in Minnesota, to produce and sell branded specialty eggs. Pursuant to the terms of the transaction, Eggland’s Best, Inc. has contributed certain assets, including its trademarks, into a new limited liability company, Eggland’s Best, LLC (“LLC”), in which Land O’ Lakes has purchased a 50 percent membership interest. Eggland’s Best, Inc. and its subsidiaries will own the other 50 percent of the LLC. The new joint venture will license both the Eggland’s Best, Inc. and Land O’ Lakes, Inc. brands. The transaction was effective April 30, 2012.
Cal-Maine expects to record a one-time gain of approximately $27.0 million, or $1.12 per share, after tax, in the Company’s financial results for the fourth quarter of fiscal 2012, as a result of this transaction.
Cal-Maine is one of 13 Eggland’s Best, Inc. shareholders and is the largest franchisee for Eggland’s Best, Inc. Cal-Maine has exclusive license agreements to market and distribute Eggland’s Best® specialty eggs in major metropolitan markets, including New York City, and a number of states in the southeast and southwest. The Company also has a license to produce and process Eggland’s Best® specialty eggs at its facilities following Eggland’s Best, Inc. guidelines. Sales of Eggland’s Best® specialty eggs accounted for approximately 16 percent of Cal-Maine’s total shell egg sales in fiscal 2011.
Pursuant to this transaction, the Company will maintain the same franchise terms and licensing agreements for Eggland’s Best® specialty eggs and will also have the opportunity to license the Land O’ Lakes brand and produce, market and sell Land O’ Lakes branded specialty eggs in its designated markets.Commenting on the announcement, Dolph Baker, president and chief executive officer of Cal-Maine Foods, Inc., stated, “We are very pleased to participate in this new joint venture with Eggland’s Best and Land O’Lakes and believe this transaction will benefit all of the members as well as our customers. This joint venture brings together two respected leaders in the egg business with proven brand recognition and a reputation for quality products. We are excited about the additional opportunities to market and sell specialty eggs, which are an important focus of Cal-Maine’s growth strategy. Specialty eggs have continued to grow in popularity with consumers looking for healthy choices, and have higher and less cyclical retail selling prices. We look forward to extending our market reach in specialty eggs with our new relationship with Land O’Lakes.”