China’s WH Group has officially revealed its intention to publicly list 20% of Smithfield Foods, the renowned pork processor it acquired over a decade ago, in the U.S. market.
The company first submitted an application for this spin-off, which will be conducted on either the New York Stock Exchange or the Nasdaq Stock Market, in July. WH Group, which secured Smithfield Foods in 2013 for $4.7 billion, intends to maintain a controlling interest in the company post-listing.
According to a filing with the Hong Kong stock exchange, where WH Group is listed, the Smithfield offering will comprise the issuance of new shares and/or the sale of existing shares. As a result, WH Group’s shareholding in Smithfield is projected to drop to approximately 80% upon completion of the offering. The exact offer price for the Smithfield shares has yet to be determined, as it will be influenced by prevailing market conditions.
Analysts anticipate that the valuation of Smithfield during the offering will not fall below its net asset value of $5.38 billion as of September 30. WH Group stated that “the proposed spin-off could better reflect the value of Smithfield Group on its own merits and improve its operational and financial transparency.”
Notably, part of the proceeds from this initiative will be allocated toward capital investments in Smithfield, focusing on enhancing infrastructure, advancing automation, and increasing production capacity. Additionally, WH Group will utilize these funds for general working capital purposes.
The company is striving to secure shareholder approval for the spin-off at an extraordinary general meeting set for December 6. In the meantime, Smithfield has faced challenges; in July, the company announced the closure of a facility in Altoona, Iowa, which affected over 300 jobs. This follows last year’s decision to close its pork-processing plant in Charlotte, North Carolina, facilitating a transfer of production to its Tar Heel facility and impacting 107 jobs.
Furthermore, in August, Smithfield restructured its European operations, rebranding its division as Morliny Foods. This change aims to “further accelerate the unique growth opportunities of both businesses.” Morliny Foods, which supplies fresh pork, poultry, and packaged meats throughout Europe, operates in countries such as Poland, Romania, Slovakia, Hungary, Spain, and the UK.
With these developments, WH Group’s strategic decisions reinforce its commitment to enhancing operational efficiency within the food and beverage industry. As the market evolves, staying informed on food and drink business trends and consumer preferences remains crucial for stakeholders in the food and beverage sector.
