Fitch: Smithfield buyout highlights value of U.S. protein assets
China's largest meat processor's proposed buyout of Smithfield Foods Inc. highlights the significant intrinsic value of U.S. protein assets, according to Fitch Ratings. Shuanghui International Holdings Limited Wednesday said it intended to buy Smithfield for $4.7 billion.
The $4.7 billion deal price values Smithfield at $7.1 billion, inclusive of $2.4 billion of total debt at Jan. 27, 2012, and represents a 31% premium over the firm's stock price on May 28, 2013. The buyout multiple is roughly 9.0 times (x) Smithfield's LTM EBITDA of $787 million. Fitch says that it views the multiple as reasonable based on historical prices paid for commodity-oriented firms and believe it reflects both an export and packaged meats premium.