Smithfield Foods Inc. (SFD) 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 President and Chief Executive Larry Pope reiterated that the company's minority ownership position in Butterball didn't permit it to execute the growth strategy that it thought necessary "to fully develop the company to its potential."
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, Smithfield said, Maxwell Farms could either accept the offer to sell or be required to purchase Smithfield's 49% interest and its related turkey production assets.
The world's largest pork processor and hog producer plans to put the sale's proceeds toward shedding debt.
Smithfield on Wednesday reported it rebounded from a prior-year loss in its fiscal first quarter with a boost from higher prices, though revenue missed analysts' expectations. 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.
Pope also said then that the company expected Maxwell to buy the Butterball stake.
Smithfield shares were down 11 cents in recent trading at $16.82. The stock is up 11% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com