Smithfield Foods, Inc. (NYSE: SFD) today announced another transaction to build its case-ready meat business in the Northeast United States.
By acquiring a stake in Pinnacle Foods, Inc. (OTC: PFOD), a provider of case-ready meat (pork, beef, lamb and veal) to retail supermarkets in the Northeast, Smithfield is taking advantage of the synergies initially created by the recently-announced agreement to purchase Moyer Packing Company last week. The combined distribution capabilities of the three companies will accelerate Smithfield’s efforts in the critical Northeast market. With square footage at a premium, the company believes that supermarkets in New York and throughout the Northeast are prime candidates for case-ready meat products.
With expected sales of about $30 million for 2001, Pinnacle has headquarters and meat packing facilities in Pottstown, Pa.
The leader in the case-ready market, Smithfield Foods sold about 75 million pounds of case-ready pork to food retailers in fiscal 2001, more than three times the volume of the prior year.
Smithfield Foods signed an agreement in principle to acquire up to 13.5 million shares, or 50 percent of the outstanding common shares of Pinnacle Foods, for a total purchase price of $6 million. The agreement also calls for Smithfield Foods to provide a $30 million revolving line of credit to Pinnacle for working capital and other purposes.
Over the last 25 years Smithfield Foods has delivered a 27 percent average annual compounded rate of return to shareholders. With annual sales of $5.2 billion, the company is the leading processor and marketer of fresh pork and processed meats in the United States, as well as the largest producer of hogs. For more information, please visit www.smithfieldfoods.com .
This news release may contain “forward-looking” information within the meaning of the federal securities laws. The forward-looking information may include statements concerning the Company’s outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. These risks and uncertainties include availability and prices of live hogs, raw materials and supplies, live hog production costs, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards, adverse results from ongoing litigation and actions of domestic and foreign governments.