Source:  Lisa M. Keefe, MEATINGPLACE.COM, 6/29/10

Smithfield Foods Inc.'s stock jumped 8.7 percent Tuesday on talk that JBS S.A. is interested in buying all or some of the U.S. hog production and pork processing company.

The Brazilian news service Valor Economico reported in an unsourced story that JBS was in negotiations to buy Smithfield. Reuters distributed that information to its audience, sending Smithfield stock to a high early Tuesday of $16.17, up from its close of $14.88 the day earlier.

By mid-day the stock had settled to about $15.50.

Initial talk was of JBS's interest in buying all of Smithfield, an $11.2 billion, international company. However, industry observers also speculated that JBS could be interested in buying only part of Smithfield, such as its 37 percent interest in Campofrio Food Group, a Madrid, Spain-based food conglomerate.

Still, Farha Aslam, equity analyst for Stephens Inc., issued a breakdown of how a sale of all of Smithfield could play out, including:

• A transaction price could range of between $5.7 billion to $6.7 billion, or an equity takeout value of $20 to $26 per share.
• The likelihood that JBS would likely have to sell certain Smithfield pork facilities, due to overlap in geography and the fact that Smithfield has an estimated 27 percent share of the pork processing market while JBS has an estimated 11 percent share.

Smithfield spokeswoman Keira Ullrich declined to comment on the rumor. JBS spokesman Chandler Keys told Meatingplace, "We make it a policy not to comment on press stories that have to with our business."

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