Reuters reports that the deal would see Sanderson Farms, the third-largest poultry producer in the United States, join hands with smaller rival Continental Grain's Wayne Farms to compete better with rivals Tyson Foods Inc and Pilgrim's Pride Corp.

Wayne Farms Chief Executive Officer Clint Rivers will lead the combined business, which will be privately held upon the deal's closure expected to be by early 2022.

Cargill and Continental Grain will pay Sanderson Farms shareholders $203 apiece, representing a premium of about 11% to the stock's closing price on Friday 6 August.

The offer price also represents a 30.3% premium to the stock's closing price on 18 June, before reports emerged about Sanderson Farms exploring a sale.

Shares of Sanderson Farms rose 8% to $196.65 in premarket trading on 9 August.

Prices of chicken products, especially those of wings and breasts, have risen as easing pandemic-related restrictions bring consumers back to restaurants and more fast-food chains add new menu items to lure customers.

Yum Brands Inc's KFC and Restaurant Brands International Inc's Burger King have launched new chicken sandwiches, while Wingstop Inc has been doubling down on chicken thighs.

Sanderson Farms, which sells frozen chicken to several US retailers and restaurants, processed over 4.8 billion pounds of meat in fiscal 2020.

Last year, Sanderson Farms rejected an unsolicited takeover offer of $142 per share from investment firm Durational Capital Management.

JP Morgan analysts said in June a deal between Continental Grain and Sanderson Farms would draw government attention, as a combined entity would control about 15% of the US chicken market and given recent lawsuits regarding chicken price fixing.

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