Meat processor Smithfield Foods, Inc. (SFD) Friday said it will sell its 49% interest in Butterball LLC and related turkey production assets for about $175 million. Turkey producer Butterball is a joint venture between Smithfield and Maxwell Farms, Inc.
Smithfield will use the proceeds of the sale, which is expected to close prior to calender year end, to reduce its debt.
Larry Pope, president and chief executive officer of Smithfield, said, "As previously stated, our minority ownership position in Butterball did not permit us to execute the growth strategy that we believe was necessary to fully develop the company to its potential. Accordingly, we are exiting the business, and will use the sale proceeds to further delever our balance sheet."
The current move from Smithfield follows Thursday's news that agriculture company Seaboard Corp. (SEB) entered into an agreement to purchase a 50% interest in Butterball in partnership with the Maxwell Farms group. Smithfield had been unsuccessful previously in buying the remaining 51% of the joint venture for about $200 million.
SFD is currently trading at $16.65, down $0.28 or 1.65%, on a volume of 1.06 million shares on the NYSE.
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