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May 22, 2002

USA: Investor group to acquire stake in ConAgra Meatpacking Unit

US food giant ConAgra Foods has sold a 54% stake in its meatpacking business to an investor group for a book value in excess of US$1.4bn, including US$950m in cash and equity, US$180m in debt and a US$250m line of credit.   The second largest food group in the US, ConAgra is to retain the remaining minority stake in ConAgra Meats, which itself ranks as the third-largest slaughterer of hogs and the third-largest slaughterer of cattle in the US, and the largest beef processing company in the Pacific rim through its Brisbane, Australia-based Australia Meat Holdings unit.

US food giant ConAgra Foods has sold a 54% stake in its meatpacking business to an investor group for a book value in excess of US$1.4bn, including US$950m in cash and equity, US$180m in debt and a US$250m line of credit.
 
The second largest food group in the US, ConAgra is to retain the remaining minority stake in ConAgra Meats, which itself ranks as the third-largest slaughterer of hogs and the third-largest slaughterer of cattle in the US, and the largest beef processing company in the Pacific rim through its Brisbane, Australia-based Australia Meat Holdings unit.

Control of the operation and its US cattle feed subsidiary will switch however to the investor group, which consists of Dallas-based buyout specialist Hicks, Muse, Tate & Furst Inc (HMTF) and Vail, Colorado-based Booth Creek Management (BCM), an investor in the meatpacking industry.

“This is an attractive opportunity to acquire leading positions in both the beef and pork processing industries, to partner with ConAgra Foods and to team up with BCM,” said John R. Muse, a partner in HMTF.

George Gillett Jr, BMC chairman, added: “ConAgra Meats has made significant progress over the past three years in enhancing its operations and financial performance. We believe that as a standalone enterprise [it] has a great future.”

Analysts believe that the move by ConAgra to reduce its equity interest in the Greeley, Colorado-based fresh meats operation to US$150m from over US$1bn was because it had proved a drag on the company’s fiscal results.

Bruce Rohde, chairman and CEO of ConAgra Foods, admitted: “This is an important step in sharpening our strategic focus while ensuring continued access to our principal supplier of top-quality meat and pork products.”

When the transaction is completed in August, the meat packer will operate under the new name Swift & Company in recognition of one of its best-selling meat brands, and the current president and COO, John Simons, will continue to run the division as CEO.

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