US meat heavyweight Smithfield Foods is poised to raise less than anticipated from its IPO due to pricing falling short of expectations.
The initial pricing guidance, which suggested a range of $23 to $27 per share, had the potential to raise as much as $940 million for the pork processor. This figure was based on a total offering of 34.8 million shares, evenly distributed between the company’s common stock and a shareholder subsidiary.
However, in an announcement made yesterday (27 January), Smithfield Foods disclosed that its IPO was priced at $20 per share, with a total offering of 26,086,958 shares—again evenly split between the two entities. The resultant funding would amount to $521.7 million.
Smithfield Foods, currently owned by China’s WH Group, is pursuing a public listing after more than ten years as a private entity. The IPO is expected to finalize on 29 January, following its debut today on the Nasdaq exchange.
The company now intends to offer 13,043,479 shares of common stock, mirroring the same amount offered by SFDS UK Holdings, which is an indirect wholly owned subsidiary of Smithfield’s parent, WH Group.
Speculation arises that the anticipated tariffs on imports into the US could have adversely influenced Smithfield’s IPO funding.
President Trump has threatened to impose a 25% import tariff on goods entering from Mexico, further complicating matters.
Smithfield, which identified tariffs as a risk factor in its IPO prospectus, operates facilities in Mexico, employing approximately 2,500 individuals there.
WH Group confirmed the spin-off of 20% of Smithfield Foods last November.
Smithfield has been actively restructuring its business to enhance operational efficiency. In August, the company separated its European operations into a standalone entity, aiming to allow local management teams to better address the distinct market dynamics in North America and Europe.
In December, Smithfield, which owns popular brands such as Smithfield, Eckrich, and Nathan’s Famous, transferred part of its hog farming operations to a new venture led by Murphy Family Ventures.
Furthermore, recent filings show that Smithfield sold its hog production assets in Utah and several farms in Missouri.
The net proceeds from the IPO, allocated to Smithfield, are set for general corporate purposes, including investments in infrastructure, automation, and capacity expansion, as previously stated by the company.
Smithfield reported a net income of $581 million from continuing operations for the nine months ending 29 September, a marked improvement compared to a net loss of $2 million during the same period last year.
For the same period, the company recorded sales of $10.2 billion, down from $10.6 billion in the prior year.
Smithfield was publicly listed on the New York Stock Exchange from 1999 until its acquisition by WH Group for $4.7 billion in 2013, which led to its privatization.
