EX-99.4 8 exhibit994.htm EX-99.4 exhibit994
exhibit994p1i0
 
Exhibit 99.4
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Contacts:
Sherman Miller, President and CEO
Max P. Bowman, Vice President and CFO
(601) 948-6813
CAL-MAINE FOODS, INC. ANNOUNCES
AGREEMENT WITH COMPANY’S FOUNDER’S FAMILY
ALSO ANNOUNCES
NEW $500 MILLION SHARE REPURCHASE PROGRAM
Announces Potential Transition to Non-Controlled Company
 
RIDGELAND, Miss.
 
(February 25, 2025) -
 
Cal-Maine Foods,
 
Inc. (NASDAQ:
 
CALM) (“Cal-Maine
 
Foods”
or the “Company”)
 
today announced that
 
it has entered
 
into an agreement
 
with members of
 
the family of
its
 
founder
 
Fred
 
R. Adams, Jr.,
 
relating
 
to
 
the
 
potential
 
diversification
 
of
 
their
 
individual
 
financial
portfolios.
 
As discussed below, the
 
agreement creates a process
 
for the potential conversion
 
of all of their
super
 
voting
 
Class A
 
Common
 
Stock
 
(“Class
 
A
 
Shares”)
 
to Cal-Maine
 
Foods’
 
Common Stock
 
(“Common
Shares”).
 
Should the conversion occur, all the Company’s shares would be a single class, with one vote per
share. Because
 
the family-owned
 
controlling stockholder
 
owns all
 
of the
 
Company’s super
 
voting shares,
converting those shares
 
into Common Shares
 
would cause the
 
controlling stockholder’s voting
 
power to fall
from 53.2% to
 
12.0%, although
 
its economic
 
interest in
 
the Company would
 
remain unchanged
 
at 12.0%.
The potential diversification could result
 
in the Company ceasing to
 
be a “controlled company” pursuant
 
to
the
 
rules
 
of
 
The
 
Nasdaq
 
Stock
 
Market.
 
The
 
timing
 
and
 
manner
 
of
 
these
 
potential
 
diversification
transactions
 
have
 
not been
 
decided. The
 
Board of
 
Directors
 
(the
 
“Board”) has
 
taken
 
the
 
steps described
below to position the Company for the potential loss of controlled company status.
The Company also announced that its Board
 
has approved a new share repurchase program which
authorizes repurchases of
 
up to $500 million
 
of Cal-Maine Foods’
 
Common Stock.
 
The actual timing,
 
value
and
 
manner
 
of
 
share
 
repurchases
 
will
 
be
 
determined
 
by
 
management
 
in
 
its
 
discretion.
 
The
 
Company
expects
 
to
 
strategically
 
and
 
opportunistically
 
repurchase
 
shares
 
from
 
time
 
to
 
time
 
in
 
the
 
open
 
market,
subject to market conditions and other factors.
As described below, the
 
Company has granted
 
registration rights to the
 
family members to facilitate
the sale of
 
Common Shares in
 
the open market,
 
should they decide
 
to sell their
 
shares.
 
It is also
 
possible
that the
 
Company could use
 
a portion of
 
its new
 
share repurchase program
 
to repurchase some
 
of the family
members’ Common
 
Shares as
 
part of
 
the family’s
 
portfolio diversification
 
efforts.
 
Any repurchases
 
from
the family members would require approval from the Special Committee of the Board described below.
Sherman
 
Miller,
 
President
 
and
 
Chief
 
Executive
 
Officer
 
of
 
Cal-Maine
 
Foods,
 
added,
 
“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.”
Agreement with Founder’s Family
Cal-Maine
 
Foods
 
has
 
entered
 
into
 
an
 
Agreement
 
Regarding
 
Conversion
 
(the
 
“Conversion
Agreement”) with DLNL, LLC (“Daughters’ LLC”) and its members (the “Members”), who include
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Mr. Adams’
 
four
 
daughters
 
and
 
Adolphus
 
B. Baker,
 
Board
 
Chair
 
(and
 
Mr. Adams’
 
son-in-law).
 
The
Conversion Agreement was unanimously approved and recommended to the
 
Board by a special committee
consisting solely of independent directors.
Daughters’
 
LLC
 
holds
 
4.8 million
 
shares
 
of
 
the
 
Class
 
A
 
Shares,
 
representing
 
100%
 
of
 
the
outstanding Class A
 
Shares.
 
The Class
 
A Shares
 
have ten
 
votes per
 
share and
 
are convertible
 
on a
 
share-
for-share
 
basis
 
into
 
Common
 
Shares,
 
which
 
have
 
one
 
vote
 
per
 
share.
 
Generally,
 
the
 
Class
 
A
 
Shares
automatically convert to Common Shares upon transfer to persons not related to the family.
The outstanding
 
Class A
 
Shares currently
 
represent approximately
 
52.0% of
 
the Company’s
 
total
voting
 
power.
 
In
 
addition
 
to
 
the
 
Class A
 
Shares,
 
Daughters’
 
LLC
 
also
 
holds
 
approximately
 
1.1 million
Common Shares,
 
bringing the
 
total voting
 
power of
 
the shares
 
held by
 
Daughters’ LLC
 
to approximately
53.2%.
The
 
Members
 
have
 
advised
 
the
 
Company
 
that
 
they
 
are
 
potentially
 
interested
 
in
 
selling
 
all
 
or
 
a
portion
 
of
 
the
 
Common
 
Shares
 
held
 
by
 
Daughters’
 
LLC,
 
including
 
shares
 
that
 
would
 
be
 
issued
 
upon
conversion of its Class A Shares.
 
The Members indicated that they were willing to work with the Company
towards achieving a smooth
 
transition.
 
Before giving effect to
 
any potential sales, if
 
Daughters’ LLC were
to convert all of
 
its Class A Shares into Common
 
Shares, Daughters’ LLC’s total voting
 
power would decline
from 53.2%
 
to 12.0%
 
of the
 
voting power
 
of the
 
Company’s then
 
-outstanding Common
 
Shares but
 
there
would be no impact on Daughters’
 
LLC’s economic interest in the Company,
 
which would remain at 12.0%.
Pursuant
 
to
 
the
 
Conversion
 
Agreement,
 
Daughters’
 
LLC
 
has
 
agreed
 
not
 
to
 
convert
 
any
 
Class A
Shares
 
into
 
Common
 
Shares
 
until
 
after
 
the
 
effectiveness
 
of
 
the
 
Restated
 
Charter
 
(as
 
defined
 
below).
 
Daughters’
 
LLC
 
has
 
also
 
agreed
 
that
 
if
 
it
 
converts
 
any
 
Class
 
A
 
Shares
 
into
 
Common
 
Shares,
 
it
 
will
simultaneously
 
convert
 
all
 
(but
 
not
 
less
 
than
 
all)
 
Class
 
A
 
Shares
 
into
 
Common
 
Shares
 
(the
 
“Class
 
A
Conversion”).
 
The Conversion Agreement does
 
not require Daughters’ LLC
 
to convert any Class A
 
Shares
or to sell any shares.
If
 
the
 
Class A
 
Conversion
 
does
 
occur,
 
the
 
Company
 
would
 
have
 
a
 
single
 
class
 
of
 
common
 
stock
outstanding with one vote per share, resulting in the following benefits to stockholders:
●
A reduction in the concentration of voting power
●
Simplification of the Company’s equity capital structure
●
Better alignment of the voting rights and economic interests of all stockholders
●
Broader
 
appeal
 
of
 
the
 
Company’s
 
shares
 
to
 
investors,
 
many
 
of
 
which
 
prefer
 
single
 
voting
class common stock structures
The
 
Conversion
 
Agreement
 
grants
 
registration
 
rights
 
to
 
the
 
Members,
 
but
 
those
 
rights
 
do
 
not
become
 
effective
 
until
 
after
 
the
 
Class
 
A
 
Conversion
 
occurs.
 
The
 
registration
 
rights
 
expire
 
on
 
(1) the
 
12-
month anniversary of the date of the Class A Conversion or (2) December 31, 2026, whichever
 
is earlier.
In connection
 
with the
 
approval of
 
the Conversion
 
Agreement,
 
the Board
 
unanimously approved
the adoption
 
of the
 
Company’s
 
Third Amended
 
and Restated
 
Certificate of
 
Incorporation (the
 
“Restated
Charter”),
 
which
 
was
 
approved
 
by
 
Daughters’
 
LLC
 
by
 
majority
 
written
 
consent
 
in
 
lieu
 
of
 
a
 
meeting
 
of
stockholders.
 
The Restated Charter
 
will become effective
 
upon filing with
 
the Secretary of
 
State of the
 
State
of
 
Delaware
 
(the
 
“Delaware
 
Secretary
 
of
 
State”).
 
The
 
Board
 
also
 
amended
 
and
 
restated
 
the
 
Company’s
bylaws to
 
align them
 
with the
 
Restated Charter.
 
The amended
 
and restated
 
bylaws will
 
become effective
when the Restated Charter becomes effective.
 
Because Daughters’ LLC has approved the Restated Charter
by majority written consent, no further stockholder action is required at this time.
Among other things,
 
the Restated Charter
 
divides the Board
 
into three classes
 
of directors serving
staggered three-year terms.
 
Cal-Maine Foods expects the term of the first
 
class of directors to expire at the
2025 annual meeting of stockholders.
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The
 
Board
 
plans
 
to
 
establish
 
a
 
fully
 
independent
 
Nominating
 
and
 
Corporate
 
Governance
Committee, and
 
the independent
 
directors will
 
appoint a
 
lead independent
 
director, to
 
be effective
 
upon
the effectiveness of the Restated Charter.
Dolph Baker, Board
 
Chair of Cal-Maine
 
Foods, stated, “I
 
am confident in
 
the future of
 
the Company,
its
 
strategy
 
and
 
its
 
management
 
team.
 
The
 
decisions
 
to
 
consider
 
diversifying
 
our
 
family’s
 
individual
financial portfolios are personal decisions made
 
in connection with our own respective financial
 
and estate
planning
 
efforts.
 
The
 
Board
 
has
 
asked
 
me
 
to
 
remain
 
as
 
executive
 
Board
 
Chair
 
at
 
least
 
through
 
the
Company’s
 
2027
 
annual
 
meeting
 
of
 
stockholders,
 
and
 
I
 
look
 
forward
 
to
 
working
 
with
 
our
 
Board
 
and
management as we continue to successfully execute our strategy.”
Miller
 
stated,
 
“These
 
arrangements
 
will
 
provide
 
the
 
Company
 
with
 
stability
 
of
 
governance
 
and
management
 
during
 
its
 
transition
 
from
 
controlled
 
to
 
non-controlled
 
company
 
status
 
and
 
facilitate
 
the
Members’
 
portfolio
 
diversification
 
in
 
an
 
orderly
 
manner
 
in
 
compliance
 
with
 
legal
 
requirements.
 
Since
1986,
 
Dolph
 
Baker has
 
contributed
 
to
 
the
 
tremendous
 
growth
 
and success
 
of
 
Cal-Maine
 
Foods.
 
We
 
are
pleased that
 
he will
 
remain executive
 
Board Chair
 
at least
 
through our
 
2027 annual
 
meeting, and
 
we will
continue
 
to
 
benefit
 
from
 
his
deep
 
understanding
 
of
 
the
 
Company’s
 
operations,
 
depth
 
and
 
breadth
 
of
experience and continued poultry industry engagement.”
$500 Million Share Repurchase Program
The
 
share
 
repurchase
 
program
 
authorizes
 
Cal-Maine
 
Foods,
 
in
 
management’s
 
discretion,
 
to
repurchase
 
up
 
to
 
$500 million
 
of
 
Common
 
Shares
 
from
 
time
 
to
 
time,
 
subject
 
to
 
market
 
conditions
 
and
other
 
factors.
 
The
 
actual
 
timing,
 
number
 
and
 
value
 
of
 
shares
 
repurchased
 
under
 
the
 
program
 
will
 
be
determined by
 
management in
 
its discretion
 
and will
 
depend on
 
a number
 
of factors,
 
including, but
 
not
limited to, the market price of Common Shares and general market and economic conditions.
Share
 
repurchases
 
under
 
the
 
program
 
may
 
be
 
made
 
from
 
time
 
to
 
time
 
through
 
solicited
 
or
unsolicited
 
transactions
 
in
 
the
 
open
 
market,
 
in
 
privately
 
negotiated
 
transactions
 
or
 
by
 
other
 
means
 
in
accordance with securities
 
laws.
 
The Company expects
 
that share repurchases
 
under the program
 
will be
funded from
 
one or
 
a combination
 
of existing
 
cash balances
 
and future
 
free cash
 
flow.
 
The share
 
repurchase
program does not obligate Cal-Maine Foods to repurchase any specific amount of shares, does not have an
expiration date, and may be suspended, modified or discontinued at any time without prior notice.
Additional Information and Where To Find It
The Company intends
 
promptly to file
 
a preliminary Information
 
Statement with the
 
U.S. Securities
and Exchange Commission (the “SEC”) regarding the Restated Charter and related
 
matters.
 
The Restated
Charter will become effective upon filing with the Delaware Secretary
 
of State, which the Company expects
to occur on or promptly after the
 
20th calendar day following the distribution of the
 
definitive Information
Statement to stockholders.
Because the Restated Charter has
 
been approved by the Board
 
and by the stockholder vote
 
required
by
 
law,
 
the
 
Company
 
will
 
not
 
be
 
soliciting
 
proxies
 
or
 
holding
 
a
 
meeting
 
of
 
stockholders
 
to
 
consider
 
the
Restated Charter.
Additional details
 
regarding the
 
Conversion Agreement,
 
the Restated Charter
 
and related
 
matters
are contained
 
in a Form
 
8-K filed by
 
the Company
 
with the
 
SEC contemporaneously
 
with the
 
issuance of
this press release and will also be contained in the Information Statement.
 
Investors may obtain copies of
all documents filed by Cal-Maine with the SEC, free of charge, at the
 
SEC’s website, www.sec.gov or at Cal-
Maine Food’s website at www.calmainefoods.com/sec-filings.
About Cal-Maine Foods
Cal-Maine
 
Foods
 
is
 
primarily
 
engaged
 
in
 
the
 
production,
 
grading,
 
packaging,
 
marketing
 
and
distribution
 
of
 
fresh
 
shell
 
eggs,
 
including
 
conventional,
 
cage-free,
 
organic,
 
brown,
 
free-range,
 
pasture-
raised and nutritionally enhanced eggs.
 
The Company, which is headquartered
 
in Ridgeland, Mississippi,
is
 
the
 
largest
 
producer
 
and
 
distributor
 
of
 
fresh
 
shell
 
eggs
 
in
 
the
 
nation
 
and
 
sells
 
most
 
of
 
its
 
shell
 
eggs
throughout the majority of the United States.
Forward Looking Statements
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 Part I
Item 1A Risk Factors
 
of our Annual Report
 
on Form 10-K for
 
the year ended June 1, 2024,
 
as well as those
included in other
 
reports we
 
file from
 
time to
 
time with
 
the SEC (including
 
our Quarterly Reports
 
on Form
10-Q and Current Reports on Form 8-K), (ii) the occurrence of any event, change or other circumstances
that could give
 
rise to the
 
Board’s decision to
 
abandon the Restated
 
Charter or to
 
the termination of
 
the
Conversion Agreement, (iii) the effect of the announcement of
 
the Conversion Agreement on the Common
Shares’
 
trading
 
price,
 
the
 
ability
 
of
 
the
 
Company
 
to
 
retain
 
and
 
hire
 
key
 
personnel
 
and
 
maintain
relationships
 
with
 
its
 
customers
 
and
 
suppliers,
 
and
 
on
 
the
 
Company’s
 
operating
 
results
 
and
 
business
generally, (iv) the impact on the
 
Common Shares’ trading price of
 
the sale or marketing, or
 
potential sale
or marketing, of a significant number of Common Shares as part of the family’s portfolio diversification,
(v) the risks and hazards inherent in the shell egg business (including
 
disease, pests, weather conditions,
and
 
potential
 
for
 
product
 
recall),
 
including
 
but
 
not
 
limited
 
to
 
the
 
current
 
outbreak
 
of
 
HPAI
 
affecting
poultry in the U.S., Canada and other countries that was first detected
 
in commercial flocks in the U.S. in
February 2022 and that first impacted our flocks in December 2023,
 
(vi) changes in the demand for and
market prices of shell eggs and feed costs, (vii) our ability
 
to predict and meet demand for cage-free and
other
 
specialty
 
eggs,
 
(viii) risks,
 
changes,
 
or
 
obligations
 
that
 
could
 
result
 
from
 
our
 
recent
 
or
 
future
acquisition of
 
new flocks
 
or businesses
 
and risks
 
or changes
 
that may
 
cause conditions
 
to completing
 
a
pending
 
acquisition
 
not
 
to
 
be
 
met,
 
(ix) risks
 
relating
 
to
 
changes
 
in
 
inflation
 
and
 
interest
 
rates,
 
(x) our
ability
 
to
 
retain
 
existing
 
customers,
 
acquire
 
new
 
customers
 
and
 
grow
 
our
 
product
 
mix,
 
(xi) adverse
results
 
in
 
pending
 
litigation
 
matters,
 
and
 
(xii) global
 
instability,
 
including
 
as
 
a
 
result
 
of
 
the
 
war
 
in
Ukraine, the conflicts
 
in Israel and
 
surrounding areas and
 
attacks on shipping
 
in the Red Sea.
 
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,
 
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
 
because
 
of
 
new
 
information,
 
future
 
events,
 
or
otherwise.
-END-