Continental Grain Co., one of the largest shareholders of Smithfield Foods, Inc. (SFD), filed a presentation highlighting the long history of underperformance at Smithfield and the steps it is recommending to unlock value and improve shareholder returns.
Continental Grain's presentation details an action plan to create substantial value for Smithfield shareholders, with the key elements including splitting Smithfield into three independent companies by selling underperforming/highly volatile Hog Production and select European assets; reinvesting the proceeds from asset sales in additional share buybacks; instituting an annual dividend with a payout ratio in line with peers; restructuring Packaged Meats to reach profitability levels in line with peers.
Also, it includes adding three new directors immediately, whose background and experience properly reflect the current business, and continuing to renew/strengthen the board each year, improving management depth at key business units; as well as creating greater alignment of management compensation to shareholder returns.
Continental Grain believes that the successful execution of this plan would result in a Smithfield stock price of $40 within 3 years.
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