Sale of operations from Smithfield Foods to JBS completed
Smithfield Foods Inc. announced that it has completed the previously announced sale of Smithfield Beef Group, Inc., its beef processing and cattle feeding operation, to JBS S.A. for US$565 million in cash.
The sale includes 100 percent of Five Rivers Ranch Cattle Feeding LLC, which previously was in a 50/50 joint venture with Continental Grain Company. Immediately preceding the closing of the JBS transaction, Smithfield Beef acquired Continental Grain's 50 percent investment in Five Rivers for 2,166,667 shares of Smithfield Foods' common stock.
Smithfield Foods expects that the net proceeds of the JBS transaction (consisting of US$565 million received at closing, plus approximately US$150 million in net proceeds from the sale of the retained cattle inventory post-closing after payment of associated debt) will be used primarily for debt reduction.
C. Larry Pope, Smithfield Foods president and chief executive officer said that this transaction is significant for their shareholders and they have dramatically improved their liquidity to about US$900 million, which should help them weather the difficult markets ahead. Additionally, they have exited the beef business, where they had a small market share and little potential to grow.
The sale is subject to customary post-closing adjustments, including adjustments for differences in working capital at closing from agreed-upon targets.
With sales of US$11 billion, Smithfield Foods is the leading processor and marketer of fresh pork and packaged meats in the United States, as well as the largest producer of hogs.