Cargill is to fold its UK fresh chicken business in with rival Faccenda Foods in the latest sign of consolidation in the UK market, after the purchase of Moy Park by US-based Pilgrim's Pride.
Cargill - one of the big four agricultural trading houses, with Archer Daniels Midland, Bunge and Louis Dreyfus – said that it and Faccenda would have equal shareholding in the new venture, which will employ 6,000 people.
The tie-up will merge Cargill's UK-based fresh chicken business – but not the import and export activities, and the Wolverhampton-based cooked poultry arm – and all Faccenda Foods' chicken, turkey and duck operations.
The new business, whose name will be revealed once the deal is closed, will "have the capability to respond to changing customer needs in the retail and food service sectors", the groups said in a statement.
"It will operate across multiple agriculture and operational centres."
And the deal comes as European Union poultry producers, already facing growing import volumes from Ukraine, face the prospect of enhanced competition from UK-based Moy Park, which is being bought by US poultry giant Pilgrim's Pride in a $1.3bn deal.
Bill Lovette, the Pilgrim's Pride chief executive, said on announcing the acquisition two weeks ago that "the acquisition gives us access to the attractive UK and European markets, which advances our strategy of diversifying our portfolio to be more global".
Janet McCollum, the Moy Park chief executive, said that "Moy Park will provide Pilgrim's with a platform for growth in Europe.
For Moy Park, which is being sold by beleaguered meatpacking giant JBS, "joining Pilgrim's gives us the opportunity to accelerate our growth plans".
Already, in June, UK-based food group 2 Sisters Food, which is centred on poultry operations besides owning brands such as Fox's biscuits, unveiled a 37% drop in operating profits for what it said was a "tough trading quarter for the business.
"The competitive landscape remains challenging."
Chris Langholz, the president of Cargill Poultry, termed the Cargill and Faccenda operations "complementary", adding that "combining into one entity allows us to build on our strengths, grow in the market and better serve our customers".
Cargill said that that "the new company will have the capability to respond to changing customer needs in the retail and food service sectors with a strategy for growth", adding that the deal was subject to clearance by antitrust officials, "which typically takes 4-6 months".
The tie-up will be headed by Andy Dawkins, the Faccenda managing director, who began his career at the Cargill chicken business, then called Sun Valley Foods.
By Mike Verdin