Smithfield to sell joint venture to Campofrio
July 9, 2008
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
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
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
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.