Smithfield seeks controlling interest in Campofrio
April 7, 2011
SMITHFIELD, VA. — Smithfield Foods Inc. is in talks with Pedro Ballve evaluating a joint de-listing takeover bid to acquire the remaining approximate 50% of Campofrio Food Group S.A. for €9.5 ($13.60) per share. Mr. Ballve is the chairman of Campofrio. If a deal is reached, the acquisition would give Smithfield 87.6% controlling interest in Campofrío, Europe’s leading packaged meats company. Smithfield currently owns 37% of Campofrio, which posted revenues of €1.83 billion ($2.62 billion) in 2010.
The announcement was made after a filing was made April 6 by Campofrio of a Communication of Relevant Fact with the Spanish securities regulators relating to the potential joint de-listing takeover bid. The bid is subject to various conditions, including completion of confirmatory due diligence, entering into all necessary binding agreements, approval of the takeover bid by the Spanish securities commission, and the waiver of the company's existing standstill agreement with Campofrio, which is currently effective until Dec. 30. The transaction also would be subject to other regulatory approvals, including competition review.
“The acquisition of Campofrio would further Smithfield’s long-term strategy of becoming a leading global consumer packaged meats company,” said C. Larry Pope, president and chief executive officer of Smithfield. “In addition, we are assessing potential synergies relating to sales, operations and raw materials with both our U.S. and international businesses.”
No financing arrangements have been finalized, but the company anticipates the estimated €500 million ($716.5 million) required to fund the takeover bid would be provided through a combination of existing liquidity and capital markets financings that will enhance shareholder value while maintaining a conservative balance sheet.
“We are in a very preliminary stage of discussions,” Mr. Pope said in a conference call. “We are having those discussions. They are ongoing. There are no definitive agreements signed by any of the parties involved in this. And, as a result of that, we feel a little bit handcuffed today in terms of what we can tell you, because the details of this transaction have not been fully developed, as well as … the way in which this would be financed has also not — not only not been finalized, we don’t even have any firm thoughts in terms of exactly how we would go forward.”
He continued, “Now with all that being said, we are excited about what could be the potential combination of our existing interest going up to substantially higher and getting a controlling interest in Campofrio. That is something we have been looking at for a number of years. We have made investments in Western Europe now for more than 10 years. And this is a platform that we have been thinking about for a number of years as a way in which Smithfield could be a big player in the Western European markets.”