Smithfield to buy ConAgra meats business
Jul 31, 2006 9:48 AM, from staff and wire reports
Smithfield Foods Inc has signed a definitive agreement to acquire substantially all of the assets of the branded meats business of ConAgra Foods Inc for $575 million.
The business includes packaged meats and turkey products sold under the Armour, Butterball, Eckrich, Margherita, Longmont. and LunchMakers brands. The brands are marketed to retail grocers, delis, restaurants, and other foodservice establishments. Combined annual sales of the businesses are about $1.8 billion.
Smithfield intends to separate the Butterball turkey business from the non-turkey packaged meats business and acquire and operate the Butterball turkey business through Carolina Turkeys, an existing partnership between Smithfield Foods and Maxwell Farms Inc. Smithfield owns 49% of Carolina Turkeys, the fourth-largest turkey producer in the United States. Smithfield said that $325 million of the purchase price will be allocated to the Carolina Turkeys joint venture with the remaining $250 million purchase price paid with $100 million in Smithfield Foods common stock and $150 million in cash. Sales of the turkey operations are about $600 million while the remaining branded meats businesses are about $1.2 billion.
The transaction is subject to Hart-Scott-Rodino antitrust clearance and other customary closing conditions. Smithfield expects to complete the transaction during its fiscal second quarter that ends Oct 30, 2006.
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