China’s WH Group has confirmed plans to list 20% of Smithfield Foods, the pork processor it bought more than a decade ago, in its home market of the US.
The company first applied for the proposed spin-off, which will take place on the New York Stock Exchange or the Nasdaq Stock Market, in July.
WH Group acquired Virginia-based Smithfield Foods in 2013 for $4.7bn. It plans to retain a majority stake in Smithfield.
According to a stock exchange filing in Hong Kong, where WH Group is listed, the Smithfield offering will involve issuing new shares and/or selling existing shares.
Upon completion, WH Group’s shareholding in Smithfield is expected to decrease to approximately 80%.
The offer price for the Smithfield offering is yet to be determined and will depend on market conditions.
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By GlobalData
The valuation of Smithfield at the time of the offering is expected to be no less than its net asset value of $5.38bn as of 30 September.
According to WH Group, “the proposed spin-off could better reflect the value of Smithfield Group on its own merits and improve its operational and financial transparency”.
Part of the proceeds will be put towards capital investment at Smithfield, including in infrastructure, automation and production capacity.
WH Group also plans to use the proceeds for general working capital purposes.
It aims to secure shareholder approval for the spin-off at an extraordinary general meeting scheduled for 6 December.
In July, Smithfield, known for brands such as Nathan’s Famous and Farmland, announced the closure of a facility in Altoona, Iowa, affecting over 300 jobs.
Last year, Smithfield announced it would close its Charlotte, North Carolina, pork-processing plant and transfer production to the company’s Tar Heel facility in the same state. That move affected 107 jobs.
In August, Smithfield carved out its operations in Europe. The European arm, previously known as Smithfield Europe, will be known as Morliny Foods.
Smithfield said the move will “further accelerate the unique growth opportunities of both businesses”.
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.
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