Chinese food conglomerate Cofco Corp. is selling seven million shares of Smithfield Foods Inc. (SFD) back to the company as it exits its stake in the U.S. pork processor.
Smithfield said last year that it expected Cofco to sell its stake in the company after their strategic partnership fell short of expectations. Cofco bought 5% of Smithfield’s shares in 2008, was once seen as a potential acquirer of the company.
Cofco is China’s largest state-owned grain trader, and sells food products ranging from vegetable oil and dairy products to alcohol.
Chief Executive C. Larry Pope said Friday that the companies would continue to work together.
“As the leading consumer of pork, China is an important export market for Smithfield and we will continue to maintain a strong commercial relationship with Cofco going forward,” said Mr. Pope. “We foresee many future business opportunities for Smithfield and China and our outlook for U.S. pork exports remains positive.”
Smithfield repurchased the shares for around $21.12 each, a premium of 1.4% to its Friday closing price.
The company, which is the largest U.S. pork producer by volume, said in September that its fiscal first-quarter earnings fell 25% as its fresh-pork business suffered from increased industry supplies and weak demand from U.S. consumers.
Smithfield shares fell 1.6% in after-hours trading to $20.50. The stock is down 14% so far this year.
Source: Wall Street Journal Nov 2012