US meat processor Smithfield Foods has announced that it has entered into a definitive asset purchase agreement with bankrupt Farmland Industries under which Smithfield will acquire substantially all of the assets, and certain liabilities, of Farmland Foods, Farmland’s pork production and processing business, for approximately US$363.5m in cash.

The definitive agreement is supported by Farmland’s committee of unsecured creditors, which represents trade creditors, and Farmland’s committee of bondholders, both appointed in Farmland’s Chapter 11 bankruptcy case, Smithfield said.

Farmland Foods has annual sales of $1.8bn. For the first six months of fiscal 2003, ended 28 February, Farmland Industries reported that its pork production and processing business had income from continuing operations of $20.3m.

Smithfield stated that it expects the transaction to be accretive to its shareholders immediately after closing.

Pending approvals, the sale is expected to be completed in approximately 75 days, unless a higher offer is received.

Farmland Industries this week reported a smaller net loss of $47.2m for the fiscal third quarter to 31 May, compared with a year-ago loss of $189.5m.

Sales for the period rose to $1.72bn from $1.45bn a year earlier. Operating income was $45.3m, compared to a year-ago operating loss of $93.0m.

Operating income at the company’s pork unit reached nearly $9m, helped by a 3% increase in sales. The unit posted a loss of $6.2m a year earlier.

The company’s beef unit, which is not part of the bankruptcy reorganisation, recorded income of $11.4m, more than four times the year-ago income of $2.6m.