Aug 1, 2006 12:00 PM

Smithfield Foods Inc has signed a purchase agreement to acquire the European meats business of Sara Lee for $575 million, plus assumption of pension-related liabilities in an amount not to exceed $39 million. Smithfield intends to complete and finance this acquisition on a stand-alone basis through a 50 percent-owned joint venture with Oaktree Capital Management LLC.

The transaction is subject to customary regulatory and closing conditions and is expected to close by the end of September.

Smithfield intends to contribute its Jean Caby operations to the joint venture with Oaktree. With sales of $372 million in fiscal 2006, Jean Caby produces branded and private label processed meats for retail and foodservice customers in France and other European nations.

Sara Lee's European meats business generated $1.1 billion in sales in fiscal 2005 and holds its largest positions in France, Portugal, and the Benelux region. The company also has a presence in Germany, Italy, and the United Kingdom.