Smithfield Foods has carved out its operations in Europe as the US pork processor plans for an IPO in its domestic market.
The Virginia-based company, owned by China’s WH Group, said the move will “further accelerate the unique growth opportunities of both businesses”.
The European arm, previously known as Smithfield Europe, will now be known as Morliny Foods.
A supplier of fresh pork and poultry and packaged meats across Europe, Morliny Foods has operations in Poland, Romania, Slovakia, Hungary, Spain and the UK.
The business and the US arm, which retains the Smithfield Foods name, will remain subsidiaries of WH Group, the world’s largest pork processor.
Media outlets have interpreted this structural change as a move that will make it easier for the US business to become listed.
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By GlobalData
Last month, WH Group, which acquired Smithfield Foods in 2013 for $4.7bn, said it had submitted a proposal to list the subsidiary on either the New York Stock Exchange or the Nasdaq bourse.
WH Group said in a statement at the time the plans are subject to approval by the Hong Kong and relevant stock exchanges and the US Securities and Exchange Commission.
“There is no assurance that [the] proposed spin-off will take place or as to when it may take place,” WH Group noted in a filing. No timeline has yet been revealed for a listing.
Smithfield Foods has not confirmed that today’s move is linked to the listing process but, suggesting the strategic necessity for this separation, Shane Smith, president and CEO of the US business, said: “It’s the right time to establish our North American and European operations as stand-alone businesses empowered to execute distinct strategies addressing different market environments and opportunities.
“In doing so, we provide our respective management teams with increased decision-making agility, optimising the performance and prospects for each business.”
Luis Cerdan, CEO of Morliny Foods, added: “We will benefit by being a nimbler competitor with a focused strategy addressing the European food market. We are confident this step will accelerate growth opportunities for our people and our company.”
In the US, Smithfield Foods has expanded the profit contribution from its higher-margin packaged meats segment and this looks set to continue.
In its statement announcing the separation, it said: “Smithfield expects to continue to drive North American growth by building packaged meats’ share through product innovation, leveraging a well-recognised brand portfolio that spans consumer price points, continually optimising its operations and through investments enabled by stable cash flows and a strong balance sheet.”
