SAFM - Sanderson Farms dips on report of concessions in Cargill takeover

Sanderson Farms ( NASDAQ: SAFM ) fell 1.7% after a report that Cargill Inc. and Continental Grain are in talks with the Dept. of Justice that may allow the antitrust regulator to approve the the takeover of the chicken producer.

The discussions are centered on how farmers and plant workers are compensated, according to a DJ report.

The DJ news comes after a similar report Wednesday that DOJ is said to be negotiating remedies with Cargill and Continental Grain on their planned purchase of the company. The parties are said to be talking about a labor safeguard, though discussion are still fluid and the agency could still sue to block the transaction, according to traders, who cited a Capitol Forum report at the time.

Sanderson Farms ( SAFM ) has traded above the $203 /share deal since last month as some investors appear to hope that the transaction would be blocked and SAFM will be valued solely on its fundamentals, which have been improving due to inflation of chicken prices.

CNBC's David Faber in early March reported the sale would likely be blocked unless some changes are made to the transaction.

Dealreporter said last month that Sanderson ( SAFM ) wants to be compensated if the deal is blocked and is expected to ask for better terms for the combination. A price of $240/share is not unreasonable in a revised deal.

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