It’s a cash transaction at $203 a share, valuing the Laurel, Miss., company at $4.53 billion.
The purchase price is a 30% premium to Sanderson Farms' closing price of $155.74 on June 18, the last full trading day prior to media speculation about the potential sale.
TheStreet.com reported Sunday that the deal was imminent.
Sanderson recently traded at $195.22, up 7.1%. The shares had climbed 23% in the six months through Friday.
Cargill, founded 1865, is the Minneapolis agricultural-products-and-services giant. Continental Grain, New York, invests in and operates food and agricultural businesses. Both are closely held.
At closing, Cargill and Continental Grain will combine Sanderson Farms with Wayne Farms, a subsidiary of Continental Grain, to form a new, privately-held poultry business.
Wayne Farms’ operations will include poultry processing plants and prepared foods plants across Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, and Texas.
The transaction is expected to close by early 2022. The acquisition group has committed equity and debt financing in place to complete the deal.
Wayne Farms Chief Executive Clint Rivers will lead the combined company.
On July 9, Stephens analyst Ben Bienvenu had lowered his rating on Sanderson Farms to equal-weight from overweight, keeping his price target at $190.
The opportunity to buy shares looked "less compelling" at the then-prevailing price, he said, according to The Fly. Sanderson closed at $184 on July 9.