Sanderson Farms Sued Again Over Proposed Acquisition by Cargill and Continental Grain

On Friday, Sanderson Farms was sued in the Eastern District of New York, alleging violations of the securities laws related to Cargill’s proposed acquisition of Sanderson. This suit follows two other recent, similar securities lawsuits filed against Sanderson in the Southern District of New York — one on September 10 and a second on September 15. All suits were brought by individual Sanderson shareholders, and all relate to the proposed acquisition of Sanderson by Cargill and Continental Grain.

Sanderson produces and distributes chicken products. On August 9, the defendants announced a proposed transaction where Cargill and Continental Grain would buy Sanderson for $203 per share. The announcement states that the $203 per share represents more than a 30% premium to Sanderson’s unaffected share price of ($155.74). On September 13, Sanderson filed with the SEC a proxy statement related to the transaction.

The plaintiff in the most-recent suit is Yurie Hoberg, who the complaint states has been an owner of Sanderson common stock. His complaint alleges that Sanderson’s August 9 announcement and its SEC proxy statement omits and misrepresents material information concerning: 

  1. Sanderson’s financial projections
  2. The financial analyses performed by Centerview Partners LLC, which was Sanderson’s financial advisor who gave a fairness opinion
  3. Potential conflicts of interest involving Centerview

Like plaintiffs in the similar lawsuits, Hoberg alleges that the proxy statement fails to disclose line items underlying various financials, as well as reconciling metrics from non-GAAP to GAAP (Generally Accepted Accounting Principles). 

The complaint’s focus on Centerview includes the advisor’s alleged failure to disclose financial figures related to Centerview’s analysis, as well as Centerview’s alleged failure to “disclose the timing and nature of the past services Centerview and/or its affiliates provided Sanderson and its affiliates, including the amount of compensation Centerview received or expects to receive for providing each service.”

Plaintiff Hoberg alleges violations of various provisions of the federal Exchange Act, as well as related SEC rules. Hoberg is represented by Halper Sadeh LLP, and he seeks an injunction from the Sanderson transaction (or in the alternative, setting it aside), as well as attorneys’ fees, costs, and expenses.