Smithfield Foods is to sell just under 5% of its business to Chinese agricultural trading and processing company COFCO Limited.

The US meat giant said it plans to use the proceeds of the sale to repay debt and for other general corporate purposes.

The purchase price per share for the 4.95% stake will be equal to the closing price of Smithfield's common stock on the pricing date for an offering of the company's convertible senior notes, which was announced separately yesterday (30 June).

"I am very pleased that COFCO has agreed to make this equity investment in Smithfield. We have been working closely together and this investment represents a significant step in cementing our relationship for the long term," said C. Larry Pope, Smithfield's president and CEO.

Smithfield expects to close on an initial US$63.1m of the shares promptly following the closing of its convertible notes offering. Settlement on the remainder of the shares will be subject to completion of a Hart-Scott-Rodino antitrust review.

Gaoning Ning, chairman of COFCO, said: "Smithfield is the world's largest producer and processor of pork. We look forward to building on our existing commercial relationship and exploring growth opportunities in China's food industry together."

Smithfield has agreed to nominate Ning for election as a director at its 2008 annual shareholders' meeting.