Cal-Maine Foods, Inc. Announces New Joint Venture by Eggland’s Best & Land O’Lakes Combining Their Specialty Egg Businesses
May 01 2012 - 09:05AM
Business Wire
Cal-Maine Foods, Inc. (NASDAQ: CALM) today announced a new joint
venture between Eggland’s Best, Inc., a New Jersey-based egg
cooperative, and Land O’ Lakes, Inc., a national farmer-owned
cooperative based in Minnesota, to produce and sell branded
specialty eggs. Pursuant to the terms of the transaction, Eggland’s
Best, Inc. has contributed certain assets, including its
trademarks, into a new limited liability company, Eggland’s Best,
LLC (“LLC”), in which Land O’ Lakes has purchased a 50 percent
membership interest. Eggland’s Best, Inc. and its subsidiaries will
own the other 50 percent of the LLC. The new joint venture will
license both the Eggland’s Best, Inc. and Land O’ Lakes, Inc.
brands. The transaction was effective April 30, 2012.
Cal-Maine expects to record a one-time gain of approximately
$27.0 million, or $1.12 per share, after tax, in the Company’s
financial results for the fourth quarter of fiscal 2012, as a
result of this transaction.
Cal-Maine is one of 13 Eggland’s Best, Inc. shareholders and is
the largest franchisee for Eggland’s Best, Inc. Cal-Maine has
exclusive license agreements to market and distribute Eggland’s
Best® specialty eggs in major metropolitan markets, including New
York City, and a number of states in the southeast and southwest.
The Company also has a license to produce and process Eggland’s
Best® specialty eggs at its facilities following Eggland’s Best,
Inc. guidelines. Sales of Eggland’s Best® specialty eggs accounted
for approximately 16 percent of Cal-Maine’s total shell egg sales
in fiscal 2011.
Pursuant to this transaction, the Company will maintain the same
franchise terms and licensing agreements for Eggland’s Best®
specialty eggs and will also have the opportunity to license the
Land O’ Lakes brand and produce, market and sell Land O’ Lakes
branded specialty eggs in its designated markets.
Commenting on the announcement, Dolph Baker, president and chief
executive officer of Cal-Maine Foods, Inc., stated, “We are very
pleased to participate in this new joint venture with Eggland’s
Best and Land O’Lakes and believe this transaction will benefit all
of the members as well as our customers. This joint venture brings
together two respected leaders in the egg business with proven
brand recognition and a reputation for quality products. We are
excited about the additional opportunities to market and sell
specialty eggs, which are an important focus of Cal-Maine’s growth
strategy. Specialty eggs have continued to grow in popularity with
consumers looking for healthy choices, and have higher and less
cyclical retail selling prices. We look forward to extending our
market reach in specialty eggs with our new relationship with Land
O’Lakes.”
Cal-Maine Foods, Inc. is primarily engaged in the production,
grading, packing and sale of fresh shell eggs, including
conventional, cage-free, organic and nutritionally-enhanced eggs.
The Company, which is headquartered in Jackson,
Mississippi, is the largest producer and distributor of fresh shell
eggs in the United States and sells the majority of
its shell eggs in approximately 29 states across the
southwestern, southeastern, mid-western and mid-Atlantic regions of
the United States.
Statements contained in this press release that are not
historical facts are forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995.
The forward-looking statements are based on management’s current
intent, belief, expectations, estimates and projections regarding
our company and our industry. These statements are not guarantees
of future performance and involve risks, uncertainties, assumptions
and other factors that are difficult to predict and may be beyond
our control. The factors that could cause actual results to differ
materially from those projected in the forward-looking statements
include, among others, (i) the risk factors set forth in the
Company’s SEC filings (including its Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K), (ii) the risks and hazards inherent in the shell
egg business (including disease, pests, weather conditions and
potential for recall), (iii) changes in the market prices of
shell eggs and feed costs, (iv) changes or obligations that could
result from our future acquisition of new flocks or businesses, and
(v) adverse results in pending litigation matters. SEC filings
may be obtained from the SEC or the Company’s website,
www.calmainefoods.com. Readers are cautioned not to place undue
reliance on forward-looking statements because, while we
believe the assumptions on which the forward-looking statements are
based are reasonable, there can be no assurance that these
forward-looking statements will prove to be accurate. Further, the
forward-looking statements included herein are only made as of
the respective dates thereof, or if no date is stated, as of
the date hereof. Except as otherwise required by law, we
disclaim any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information,
future events or otherwise.
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