Cal-Maine Foods Inc (NASDAQ: CALM) 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.
Under 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, in which Land O’ Lakes has purchased a 50% membership interest. Eggland’s Best Inc and its subsidiaries will own the other 50% of the LLC. The new joint venture will license both the Eggland’s Best Inc and Land O’ Lakes brands. The transaction took effect April 30, 2012.
Cal-Maine is one of 13 Eggland’s Best Inc shareholders and is the largest franchisee for Eggland’s Best Inc. It 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% 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.