Smithfield Foods Completes Acquisition of ConAgra Foods Refrigerated Meats Business
October 02 2006 - 2:47PM
PR Newswire (US)
SMITHFIELD, Va., Oct. 2 /PRNewswire-FirstCall/ -- Smithfield Foods,
Inc. (NYSE:SFD) today announced that it had completed the
acquisition of the assets of the branded meats business of ConAgra
Foods, Inc. (NYSE:CAG) for $571 million in cash, subject to certain
post-closing adjustments. Originally Smithfield announced that $100
million in Smithfield Foods common stock would be part of the
purchase price. Smithfield and ConAgra Foods subsequently agreed to
an amendment to the original agreement, reducing the purchase price
by $4 million and an all cash payment. The business includes the
packaged meats and turkey products sold under the Armour,
Butterball, Eckrich, Margherita, Longmont and LunchMakers brands.
The brands are marketed to retail grocers, delis, restaurants and
other foodservice establishments. The combined annual sales of the
businesses are about $1.8 billion. The acquisition was completed in
two parts. The Butterball turkey business was acquired by
Butterball, LLC (formerly known as Carolina Turkeys), a joint
venture between Smithfield Foods and Maxwell Farms, Inc., for $325
million. Smithfield owns 49 percent of Butterball, LLC. Smithfield
acquired the other branded packaged meats assets from ConAgra Foods
for $246 million. "This acquisition is a terrific strategic fit for
Smithfield," said C. Larry Pope, president and chief executive
officer. "We are now a partner in the largest turkey business in
the United States that adds to our multi-legged stool in terms of
our protein portfolio, providing stability of financial performance
and diversity in our product mix. Butterball is a national brand
with impressive brand equity. We also are adding 600 million pounds
of packaged meats, almost all of which are branded, with large
market shares in hot dogs, dinner sausages and luncheon meats. This
immediately advances our strategy of growing our packaged meats
business, utilizing raw material internally, as well as migrating
to higher margin, convenience products," he said. "We are delighted
to have completed this transaction in advance of our original
timeframe," said Gary Rodkin, ConAgra Foods' chief executive
officer. "It enables us to increase our focus on priority brands
and pursue additional cost-reduction efforts earlier than
originally expected." Butterball, LLC is now the largest turkey
producer in the U.S. with sales of more than $1 billion. In fiscal
2006 Butterball sales were $600 million and Carolina Turkeys' sales
were $495 million. The new organization will be led by Keith
Shoemaker, formerly of Carolina Turkeys, who will be chief
executive officer of the new company. The other packaged meats
assets which produce further processed pork products will be
operated as a unit of Smithfield's subsidiary, John Morrell &
Co., under the banner of Armour Eckrich. Smithfield Foods has
delivered a 24 percent average annual compounded rate of return to
investors since 1975. With sales of $11 billion, Smithfield is the
leading processor and marketer of fresh pork and processed meats in
the United States, as well as the largest producer of hogs. For
more information, visit http://www.smithfieldfoods.com/. ConAgra
Foods, Inc. (NYSE:CAG) is one of North America's largest packaged
food companies, serving grocery retailers, as well as restaurants
and other foodservice establishments. Popular ConAgra Foods
consumer brands include: Banquet, Chef Boyardee, Egg Beaters,
Healthy Choice, Hebrew National, Hunt's, Marie Callender's, Orville
Redenbacher's, PAM, Reddi-wip, and many others. This news release
may contain "forward-looking" information within the meaning of the
federal securities laws. The forward-looking information may
include statements concerning the company's outlook for the future,
as well as other statements of beliefs, future plans and strategies
or anticipated events, and similar expressions concerning matters
that are not historical facts. The forward-looking information and
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed in, or
implied by, the statements. These risks and uncertainties include
availability and prices of livestock, raw materials and supplies,
livestock costs, product pricing, the competitive environment and
related market conditions, operating efficiencies, access to
capital, the cost of compliance with environmental and health
standards, adverse results from ongoing litigation and actions of
domestic and foreign governments. DATASOURCE: Smithfield Foods,
Inc. CONTACT: Jerry Hostetter of Smithfield Foods, Inc.,
+1-212-758-2100, ; or Chris Kircher of ConAgra Foods, Inc.,
+1-402-595-5392, Web site: http://www.smithfieldfoods.com/
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