US poultry major Sanderson Farms has advised the market its planned merger with local peer Wayne Farms is likely to be further delayed.

The move was intended to follow the sale of Sanderson Farms to agri-food giant Cargill and investor Continental Grain Co. but that deal is being examined by the US government over concerns about what it might mean for competition in the sector.

The plan was for Sanderson Farms to be delisted and merged with Wayne Farms, a Continental Grain Co. portfolio business.

The sale of Sanderson Farms for US$4.5bn was agreed last August. At the time the companies said the deal was expected to close either by the end of the year or early in 2022 and was approved by Sanderson shareholders in October.

But, in December the US Department of Justice (DoJ) sent a request for additional information and “documentary material” to Sanderson Farms as part of its antitrust review, leaving the deal in the balance.

However, in a filing with the US Securities and Exchange Commission on Wednesday (29 June), seen by Just Food, Sanderson Farms suggested the deal is delayed rather than blocked.

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By GlobalData

It no longer expects the deal to close in the first half of 2022, as it had suggested in a filing in March.

Sanderson said the businesses are “still working to satisfy the other conditions” to close the deal. However, it warned there “can be no assurance” the companies will satisfy closing conditions of the merger.

Sanderson is one of the largest poultry processors in the US, while Wayne Farms claims to be the seventh-largest poultry processor by volume in the country with around $2.2bn in sales. Combined, it would become the third-largest poultry processor in the US.

The DOJ has not yet announced the status of the merger inquiry but the Biden Administration is known to be unhappy that the US meatpacking industry is controlled by a few large firms.

Democrats such as Senator Elizabeth Warren are calling for a probe into both consolidation and rising poultry prices.

Read Just Food’s analysis: What is Joe Biden’s beef with US meatpackers?