June 30, 2008

Groupe Smithfield and Campofrio Agree to Merge

SMITHFIELD, Va., June 30, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Smithfield Foods, Inc. (NYSE: SFD) announced today that Groupe Smithfield Holdings, S.L., its 50/50 joint venture with funds controlled by Oaktree Capital Management LLC, has agreed to merge with Campofrio Alimentacion, S.A., the largest processed meats company in Spain. Campofrio, a publicly-traded company on the Spanish Stock Exchanges, will issue shares to Smithfield Foods and Oaktree in exchange for all of the membership interests in Groupe Smithfield. Smithfield, which currently owns 24 percent of Campofrio, will own 36 percent of the combined company after the merger.

The merger will form the leading pan-European company in the processed meats sector with sales of more than $3 billion, leading market shares in Spain, France, Belgium and Portugal and a strong presence in The Netherlands, Romania and Russia. The combined company will be headquartered in Madrid, and will continue to operate under the Campofrio name. Campofrio products are distributed in over 40 countries and Groupe Smithfield has a presence in seven major markets in Europe.

The two companies expect to achieve substantial synergy opportunities in sourcing, manufacturing, and capital expenditures and believe that they offer a platform for future growth.

"This is another key milestone in Smithfield's strategy to enhance its processed meats presence globally. The two companies are very complementary and merging them will provide many significant synergy opportunities," said C. Larry Pope, Smithfield president and chief executive officer. "There is a clear correlation between an operation's size and profitability in European processed meats and this merger will make the combined Campofrio-Groupe Smithfield a much stronger company," he said.

Pedro Ballve, chairman of Campofrio, said that Campofrio and Groupe Smithfield were a strategic fit, with a consolidated position as Europe's leading processed meats company. "This deal significantly enhances our operating platform with complementary manufacturing and marketing, as well as a strong potential for value creation from synergies between the two companies," he said.

"This transaction is an unique opportunity to become the leading player in the packaged meats market, almost three times larger than our closest competitor, with a clear success story supported by leading brands in every market in which we operate," said Robert Sharpe, president and chief executive officer of Groupe Smithfield. "We have the ingredients for a winning combination: Campofrio's know-how in marketing and innovation, as well as its solid position in the branded products segment in Spain along with Groupe Smithfield's expertise in sourcing and productivity and its presence in France," said Mr. Sharpe.

The merger, which is subject to shareholder and regulatory approval, including the grant of a takeover bid exemption by the Spanish securities regulator (CNMV), is expected to close in Smithfield's third fiscal quarter. After the merger Smithfield would continue to account for its investment in Campofrio under the equity method of accounting.

With sales of $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. For more information, visit www.smithfieldfoods.com .

This news release contains "forward-looking" statements within the meaning of the federal securities laws. The forward-looking statements includes 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 Company's 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 the availability and prices of live hogs and cattle, raw materials, fuel and supplies, food safety, livestock disease, live hog production costs, product pricing, the competitive environment and related market conditions, the timing and extent to which beef export markets are reopened, hedging risk, operating efficiencies, changes in interest rate and foreign currency exchange rates, access to capital, the investment performance of the Company's pension plan assets and the availability of legislative funding relief, the cost of compliance with environmental and health standards, adverse results from on- going litigation, actions of domestic and foreign governments, labor relations issues, credit exposure to large customers, the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations and other risks and uncertainties described in the Company's Annual Report on Form 10-K for fiscal 2008 and in its subsequent Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on forward-looking statements because actual results may differ materially from those expressed in, or implied by, the statements. Any forward-looking statement that the Company makes speaks only as of the date of such statement, and the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

SOURCE Smithfield Foods, Inc.


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