Shares of Sanderson Farms were up more than 10% after The Wall Street Journal reported that Sanderson hired Centerview Partners for advice after attracting the interest of potential buyers, including agricultural investment firm Continental Grain.
Mississippi-based Sanderson, the third-biggest U.S. chicken producer by processing capacity, had a market value of around $3.5 billion Monday afternoon, and a buyer would be expected to pay a premium to that, according to the Journal.
Demand for chicken breasts, wings and other products has increased as pandemic restrictions lift and restaurants reopen, boosting sales and prices. The cost of boneless, skinless chicken breast has more than doubled since the beginning of the year and wing prices have hit records.
A deal with Continental would merge Sanderson with Georgia-based Wayne Farms, a poultry producer owned by Continental, forming a company producing about 15% of the country's chicken meat. No. 2 player Pilgrim's Pride (PPC) - Get Report produces about 16% of the national total.
Separately, J.P. Morgan analyst Ken Goldman raised his price target on Sanderson Farms to $198 from $175 and held his overweight rating on the shares, noting in a research update that he would not be surprised at an asking price in excess of $200 a share.
Shares of Sanderson Farms were up 10.58% at $184.30. The stock has gained nearly 30% year to date.