Cal-Maine Foods has entered an agreement with founder Fred R. Adams, Jr.’s family members that, if approved, may terminate the producer’s status as a controlled company in the National Association of Securities Dealers Automated Quotations (NASDAQ) Stock Market.
The agreement would convert of all the producer’s super voting Class A Common Stock to Cal-Maine Foods’ Common Stock, making all its shares the same class, with one vote per share. Class A Stock often allows extra voting rights, is not sold to the public and cannot be traded by the holders of those shares.
Because the family-owned stockholders own all the producer’s super voting shares, converting those shares into Common Stock would cause the controlling stockholder’s voting power to decrease from 53.2 percent to 12 percent. However, its economic interest in the company would stay at 12 percent.
The producer has also approved a new share repurchase program that will authorize the repurchase of up to US$500 million of Cal-Maine’s Common Stock.
According to Cal-Maine Foods President and Chief Executive Officer Sherman Miller, the producer expects to strategically repurchase shares in the open market if market conditions allow. The producer has also granted registration rights to the founder’s family members to promote the sale of Common Stock in the open market if they decide to sell their shares.
Miller stated, “Our share repurchase program underscores our continued confidence in the strength of our business and future cash flow generation, as well as our commitment to returning capital to our valued shareholders. We enjoy a strong cash balance and strong balance sheet. Our management and board are continually evaluating opportunities to deploy our cash in a manner to achieve the best value for our stockholders. The share repurchase program provides us with another tool to achieve that objective.”