The sale reportedly includes 100 percent of Five Rivers Ranch Cattle Feeding LLC, which previously was in a 50/50 joint venture with Continental Grain Co. Immediately preceding the closing of the JBS transaction, Smithfield Beef acquired Continental Grain's 50 percent investment in Five Rivers for 2,166,667 shares of Smithfield Foods' common stock.
Smithfield Foods said it expects that the net proceeds of the transaction will be used primarily for debt reduction.
"This transaction is significant for our shareholders," said C. Larry Pope, Smithfield Foods president and chief executive officer. "We have dramatically improved our liquidity to about $900 million, which should help us weather the difficult markets ahead. Our balance sheet is much stronger today. Additionally, we have exited the beef business, where we had a small market share and little potential to grow."
The sale is subject to customary post-closing adjustments, including adjustments for differences in working capital at closing from agreed-upon targets, the company said.
Source: Smithfield Foods Inc.