Smithfield, Va., (October 28, 2003) --Smithfield Foods, Inc. (NYSE: SFD) today announced the completion of the acquisition of substantially all of the assets of Farmland Foods, the pork production and processing business of Farmland Industries, Inc. The closing followed the approval of the sale by the United States Bankruptcy Court in Kansas City, Missouri today.
Smithfield was the successful bidder at an auction held October 12 under auction and bid procedures approved by the Bankruptcy Court. The purchase price for the Farmland Foods business was $367.4 million in cash, plus the assumption of certain Farmland liabilities, and is subject to post-closing adjustments for certain working capital items. The assumed liabilities include the pension obligations and associated assets of both Farmland Foods and Farmland Industries, with Smithfield's agreement to assume such pension obligations valued at $90 million in the auction by the debtor. The company said that the actual net pension liability assumed by Smithfield, and to be reflected in the company's financial statements, will be calculated in accordance with generally accepted accounting principles, and is expected to be substantially less.
"This is a great day for all Farmland constituencies," said C. Larry Pope, president and chief operating officer of Smithfield Foods. "This transaction provides Farmland's independent producers, employees, customers, pensioners, suppliers and communities with the comfort of knowing that Farmland Foods is financially sound. With Smithfield's support and leadership, Farmland Foods will succeed and continue to sustain the Midwestern communities which depend on it."
"We are truly excited about joining the Smithfield Foods family of companies," said George H. Richter, president of Farmland Foods. "Importantly, our employees' morale has remained high through this period of uncertainty. Our customers have been loyal and our relationship with them remains healthy. All of us at Farmland Foods are eager to become part of this dynamic Smithfield organization and work together to grow our business," he said.
Mr. Pope said that the transaction will benefit Smithfield shareholders, for it is expected to be immediately accretive to earnings before the impact of cost savings and synergies. "Farmland Foods has a talented management team, a well-respected brand name and efficient pork processing operations with a substantial value-added processed meats business. They bring new product and distribution opportunities to Smithfield to better serve our customers. This is a transaction that will continue to build shareholder value over time," he said.
With the acquisition of Farmland, Smithfield Foods annualized sales will approach $10 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, please visit www.smithfieldfoods.com.
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, livestock disease, food safety, product pricing, the competitive environment and related market conditions, ability to make and successfully integrate acquisitions, 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.