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Tuesday, February 11, 2025

Smithfield Foods plans IPO, invests in N.C. hog producers

Smithfield Foods, the world’s largest pork producer and employer of more than 10,000 in North Carolina, filed for an initial public offering in New York that will return the maker of Farmer John sausage and Gwaltney bacon to the U.S. stock market.

The IPO comes 12 years after Hong Kong-based WH Group took the Smithfield, Virginia-based company private in a $4.7 billion acquisition. At that time, it was the largest Chinese takeover of a U.S. company.

Smithfield and an indirectly owned subsidiary of its owner are both offering shares in the listing, according to a U.S. Securities and Exchange Commission filing Monday. WH Group will maintain control of the company after the listing on the Nasdaq Global Select Market under the symbol “SFD.”

WH Group said in October it planned to sell 20% of Smithfield’s shares, valuing the company at $5.38 billion or more. The spinoff of the U.S. and Mexican businesses follows last August’s transfer of Smithfield’s European operations to WH Group.

The move is aimed at focusing on North America, where the company aims to spend IPO proceeds on capital investments in infrastructure, automation and capacity expansion, the filing said.

Smithfield’s operations in the town of Tar Heel make it Bladen County’s largest employer, with more than 5,000 workers, according to previous state reports. It has been described as the largest U.S. pork production plant.

This week’s filing said that Smithfield paid $3 million in cash for a 25% interest in Murphy Family Farms, run by the family that has been a leading pork producer in North Carolina for two generations.

Last month, Smithfield and Wallace-based Murphy Family Ventures signed an agreement establishing the pork farming business with capacity to produce approximately 3.2 million hogs annually for Smithfield’s fresh pork operations. The transaction shifted ownership of approximately 150,000 sows, and the market hogs they produce, from Smithfield to Murphy Family Farms. It plans to supply about 3.2 million hogs to Smithfield annually, the filing said.

Separately, Smithfield agreed to pay $450,000 in cash for a 9% stake in VisionAg Hog Production, an affiliate of Elizabethtown-based HD3 Farms. Smithfield plans to sell approximately 28,000 sows and the associated commercial hog inventories to VisionAg, which plans to supply Smithfield with roughly 600,000 hogs annually.

Smithfield reported net income of $581 million in the nine months ended Sept. 29 on sales of $10.19 billion. That compares with a net loss of $2 million in the same period a year earlier. Sales were $10.6 billion in the 2023 period.

Founded as a pork-processing operation in 1936, Smithfield expanded through a series of acquisitions beginning in the 1980s to create the largest fresh pork processor in the United States. The company was listed on the New York Stock Exchange from 1999 until its acquisition in 2013.

The company employs about 34,000 people in the U.S., where it operates 39 production facilities and another 2,500 at a Mexican facility. It has trimmed its employment by about 3,500 people in the past two years, including about 2,500 fewer production workers.

The North Carolina operations include five production sites, 930 contract farms, 26 feed facilities and a distribution center.

Among risks, Smithfield is vulnerable to the cyclical nature of commodity prices for meat, livestock and feed ingredients such as grains, the filing said. The return of Donald Trump to the White House poses another risk if Congress follows through with immigration reform proposed by the incoming president, according to the filing.

“If new immigration legislation is enacted, such laws may contain provisions that could increase our costs in recruiting, training and retaining employees, increase our costs of complying with federal law in reviewing employees’ immigration status and create employee shortages,’’ Smithfield said.

“Furthermore, increased enforcement efforts with respect to existing immigration laws by governmental authorities may disrupt a portion of our workforce or our operations,” the filing said. “There can be no assurance that these activities or consequences will not adversely affect our business, financial condition or results of operations in the future.”

 

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