Smithfield Foods has completed the sale of its domestic beef operations to Brazil’s JBS.
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Smithfield Beef, the US meat giant’s beef processing and cattle feeding operation, was sold for US$565m in cash, the company said yesterday (23 October).
The sale included 100% of Five Rivers Ranch Cattle Feeding, which was previously in a 50/50 joint venture with Continental Grain Company.
Following the closure of the JBS transaction, Smithfield Beef acquired Continental Grain’s 50% investment in Five Rivers for 2,166,667 shares of Smithfield Foods’ common stock.
Smithfield Foods said it will use the net proceeds of the JBS transaction, comprising of $565m, plus around $150m in net proceeds from the sale of the retained cattle inventory, for debt reduction.
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By GlobalData“This transaction is significant for our shareholders,” said Larry Pope, Smithfield Foods president and chief executive officer. “We have dramatically improved our liquidity to about $900m, which should help us weather the difficult markets ahead. Our balance sheet is much stronger today.
“Additionally, we have exited the beef business, where we had a small market share and little potential to grow.”
As previously announced, the transaction excluded all live cattle inventories held by Smithfield Beef and Five Rivers, and any associated debt.
