Smithfield Selling Five Per Cent of Shares

US - Smithfield Foods Inc. on Monday announced it has entered into an agreement with COFCO Limited, China's largest national agricultural trading and processing company, for the sale of 7,000,000 shares, or 4.95 percent of Smithfield's common stock.
calendar icon 2 July 2008
clock icon 3 minute read

The purchase price per share will be equal to the closing price of Smithfield's Common Stock on the pricing date for the offering of the company's Convertible Senior Notes, which was announced separately yesterday. The company plans to use the proceeds of the sale to repay indebtedness and for other general corporate purposes.

"I am very pleased that COFCO has agreed to make this equity investment in Smithfield. We have been working closely together and this investment represents a significant step in cementing our relationship for the long term," stated C. Larry Pope, Smithfield's president and chief executive officer.

"COFCO is a widely respected leader in China's food and agriculture industry," Pope said. "China is experiencing rapid growth in pork consumption and consumes more pork than the rest of the world combined. COFCO has introduced Smithfield to many opportunities in China and we look forward to continue working together."

Gaoning Ning, the chairman of COFCO, said, "Smithfield is the world's largest producer and processor of pork. We look forward to building on our existing commercial relationship and exploring growth opportunities in China's food industry together." In connection with the sale, Smithfield has agreed to nominate Ning for election as a director at its 2008 annual shareholders' meeting. COFCO's investment in Smithfield is passive in nature and the purchase agreement contains standstill provisions.

Smithfield expects to close on an initial $63.1 million of the shares promptly following the closing of Smithfield's convertible notes offering. Settlement on the remainder of the shares will be subject to completion of Hart-Scott-Rodino antitrust review.

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