Cargill, Inc. is the largest private company in the United States. Since its founding in 1865 by William W. Cargill, the company has maintained its status as a private company mainly owned by family heirs. Cargill is one of the largest players in the agricultural, livestock and processed foods markets. Through a series of acquisitions, Cargill grew from a single grain mill into a company generating more than $120 billion in annual revenue.
Tight Family Control
Since its founding by William W. Cargill, the company has remained a family owned private company. Cargill had two children, a son, Austen and daughter, Edna, who married a business partner of her father’s, John MacMillan. As of November 2015, more than 100 family members own 85% of Cargill shares.
In the early days, the company allowed the family to have total control of Cargill. Over time, it has diversified away from family management. The year 1960 marked the first time a nonfamily member became the chief executive officer (CEO) of Cargill. The 17-member board of directors only has six family members, with the rest coming from other company directors and outside personnel.
Pressure for an IPO Averted
There have been several times when owners of Cargill stock have pushed for an initial public offering (IPO). Due to its massive size and huge assets, Cargill has been able to avert IPO pressure. In 1993, it started an employee stock plan that allowed owners of stock to cash in on parts of their shares. This kept the pressure of an IPO at bay, and 85% of the company remained in the hands of the many family shareholders.
Another cry for an IPO came later in the late 2000s. Cargill faced pressure from the shareholders and charitable trusts that owned stock in the company; on paper, they were worth a lot but were very illiquid. It decided to spin off its 64% ownership of The Mosaic Company, one of the largest fertilizer companies in the world. This move allowed shareholders to trade Cargill stock for Mosaic shares. This spinoff also afforded Cargill a chance to pay down more debt.
Massive Size a Factor in Being Private
Forbes magazine has published an annual list of the largest private companies in America for 31 years. In 29 of those annual lists, Cargill has claimed the top spot. In 2015, the company was once again ranked first with revenue of $120.4 billion. This total puts Cargill in the top 15 on the Fortune 500 list of highest revenue-producing companies.
The massive size of the company and its continued focus on paying down debt has helped it maintain a good debt rating. Cargill has an A rating with both Standard & Poor's and Fitch, and an A2 rating from Moody’s. With these good ratings, it can continue to raise money at low interest rates without needing to raise money through an equity offering. The company’s debt has shrunk from $22.5 billion in 2011 to $12.3 billion in 2015.
Rivals Publicly Traded
While you cannot invest in Cargill, you can invest in two of the company's largest rivals on the open market. Bunge Limited and the Archer Daniels Midland Company are publicly traded companies in the food processing and agricultural industries. As of 2015, in the last fiscal year, Bunge had revenue of $57.8 billion and a market capitalization of $58 billion. Archer Daniels Midland reported revenue of $81.2 million for the last fiscal year and a market capitalization of $81 billion.
The stock performances of both companies has been rather lackluster over the last five- and 10-year periods, which might give Cargill pause to go public. Bunge has seen shares increase 21% in the last five years and only 29% in the last 10 years. Archer Daniels Midland has performed better with a five-year gain of 39% and 10-year gain of 71%.