View Cart (0 items)
Food & Beverage

Smithfield to sell joint venture to Campofrio

July 09, 2008
/ Print / Reprints /
| Share More
/ Text Size+
According to the Associated Press, pork producer Smithfield Foods Inc. said recently it will sell Groupe Smithfield Holdings SL, its main European subsidiary, to Campofrio Alimentacion SA, the largest processed meats company in Spain.

Smithfield also said it was selling 4.95 percent of its common stock to COFCO Ltd., China''s largest national agricultural trading and processing company.

Campofrio will issue shares to Smithfield Foods and its joint venture partner Oaktree Capital Management LLC in exchange for all of the membership interests in Groupe Smithfield.

Smithfield, which owns 24 percent of Campofrio, will own 36 percent of the combined company.

The combined company will have sales of $3 billion and have a presence in Spain, France, Belgium and Portugal, as well as The Netherlands, Romania and Russia.

Smithfield Chief Executive C. Larry Pope said there is a correlation between the size of an operation and its profitability in the European market, and the merger will make a stronger company.

Pedro Ballve, chairman of Campofrio, said the companies were a strategic fit.

The combined company will be headquartered in Madrid and operate under the Campofrio name.

The deal, subject to shareholder and regulatory approval, is expected to close in Smithfield''s fiscal third quarter.

Smithfield said that it intends to offer $350 million aggregate principal amount of its convertible senior notes due in 2013.

The Chinese company COFCO will buy 7 million Smithfield shares -- equal to the 4.95 percent stake -- at the closing price of Smithfield''s common stock on the pricing date for the convertible senior notes. Smithfield said it plans to use the proceeds of the stake sale to repay debt, as well as other general use purposes.

Smithfield said it will nominate COFCO Chairman Gaoning Ning to its board at the company''s 2008 shareholders meeting.

The nation''s largest hog producer and pork processor said in early June that fourth-quarter profits fell 94 percent, hurt by rising grain costs and falling hog prices.
You must login or register in order to post a comment.

Related Events