US pork producer Smithfield Foods said today (30 June) that it will sell its Groupe Smithfield venture to Campofrio Alimentacion, Spain's largest processed meat producer.

Groupe Smithfield, a joint venture with Oaktree Capital Management, will be merged with Campofrio, who will issue shares to Smithfield and Oaktree in exchange for all membership interests in the venture.

Smithfield, which currently owns 24% of Campofrio, will own 36% of the combined company after the merger.

The merger will form the leading pan-European company in the processed meats sector with sales of more than US$3bn, leading market shares in Spain, France, Belgium and Portugal and a strong presence in The Netherlands, Romania and Russia.

The combined company will be headquartered in Madrid, and will continue to operate under the Campofrio name.

"This is another key milestone in Smithfield's strategy to enhance its processed meats presence globally. The two companies are very complementary and merging them will provide many significant synergy opportunities," said C. Larry Pope, Smithfield president and CEO. "There is a clear correlation between an operation's size and profitability in European processed meats and this merger will make the combined Campofrio-Groupe Smithfield a much stronger company."

The merger, which is subject to shareholder and regulatory approval, including the grant of a takeover bid exemption by the Spanish securities regulator, is expected to close in Smithfield's third fiscal quarter, which ends in January next year.