Smithfield Foods Inc., the largest hog producer and largest pork processor in the U.S., has decided not to split the company into three independent, separate companies.
In an investor presentation and regulatory filing April 1, Smithfield said a split-up would make it less competitive and less responsive to customers, and in fact, the company said major customers had urged it not to pursue the concept.
The split-up was proposed by Continental Grain Co., which is one of Smithfield's largest shareholders, with about a 6% stake in the company.
Continental suggested that Smithfield divide itself into a hog production company, a fresh pork and packaged meats company in the U.S. and an international hog production and pork processing company in Europe (Feedstuffs, March 18). The fresh pork and packaged meats company would be Smithfield.
Continental maintained that this would free up capital for Smithfield to focus on the higher-margin packaged meats sector and increase the company's stock value.
The company did retain Goldman Sachs Group Inc. to advise it on the proposal (Feedstuffs, April 1), but Smithfield chief executive officer and president C. Larry Pope reiterated his position that the integrated nature of the company provides the flexibility needed for innovation and responsiveness.
He noted that this flexibility has allowed the company to move its hog farms to group pens for gestating sows for customers in the U.S. and to ractopamine-free herds for customers overseas and to develop new products that meet consumer demand.
Smithfield, headquartered in Smithfield, Va., reported fiscal 2012 sales that totaled $13.1 billion.