April 2, 2013

Smithfield lays out argument on remaining intact

Smithfield laid out its argument for remaining an integrated pork processor as it released an 8-K filing document on Monday (Apr 1) with the Securities and Exchange Commission.

CEO C. Larry Pope and CFO Robert W. Manly plan to meet with investors in the first three days of this week, and the filing includes the information the executives will discuss. Recently, two large shareholders have suggested that Smithfield would benefit from selling its production business and making other changes to its structure.

Among the company's arguments in favour of integration, are that it provides access to supply, allows for better traceability, creates efficiency and helps reduce the volatility in its earnings. Also, "according to Smithfield, major customers have reached out and suggested that the company not let go of its farms," JPMorgan equities analyst Ken Goldman says in a report to investors about the filing.

Other arguments for keeping the company's parts together is the prospect of creating a new competitor by spinning off or otherwise divesting parts of the company; and that as an integrated company, Smithfield has improved its return to shareholders significantly over the last several years.