Smithfield Sells Butterball Stake
Smithfield Sells Butterball Stake
Smithfield Sells Butterball Stake
Smithfield Foods Inc. will sell its 49% stake in the Butterball turkey business to joint-venture partner Maxwell Farms, as widely expected, with the offer seen generating proceeds of about $175 million.
Smithfield Chief Executive Larry Pope reiterated that the company's minority ownership position in Butterball prevented it from doing what it thought necessary "to fully develop the company to its potential."
Smithfield has said Butterball suffered from a lack of investment since ConAgra Foods Inc. sold it in 2006.
Smithfield in June said it had made an offer to purchase Maxwell Farms' 51% stake in Butterball and related turkey production assets for about $200 million. Under the partners' agreement, Maxwell Farms could either choose to sell or be required to purchase Smithfield's 49% interest.
Smithfield, which is the world's largest pork processor and hog producer, plans to pay off debt with the sale's proceeds.
Maxwell Farms, a subsidiary of North Carolina-based Goldsboro Milling Co., is entering a partnership with Seaboard Corp. to purchase the minority share.
Seaboard, which is based in Kansas, is focused mainly on agricultural products, including pork production and grain trading, along with ocean shipping.
"Seaboard is a strong, diversified company with a great reputation in the agriculture and food industries, and we are confident the partnership will be mutually beneficial for both companies," Maxwell Farms President Walter Pelletier said in a prepared statement.
Virginia-based Smithfield on Wednesday reported it rebounded from a prior-year loss in its fiscal first quarter with a boost from higher prices. Looking ahead, Smithfield is poised to benefit from reduced total meat output, significantly smaller frozen stocks of animal proteins held in the nation's warehouses and continued strong exports.
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