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Activist shareholder advances challenge to Smithfield/Shuanghui deal
Story Date: 7/16/2013
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Source: Chris Scott, MEATINGPLACE, 7/15/13
Starboard Value LP is calling on two financial advisors to help identify the value of breaking up Smithfield Foods Inc., even as the Virginia-based hog processor files with regulators to sell $800 million in bonds related to its proposed $7.1-billion acquisition by Shuanghui International.
The New York-based hedge fund informed the Securities and Exchange Commission that it has hired Moelis & Company and BDA Advisors Inc. to find what it describes as a “sum-of-the-parts” deal that could be worth more value to Smithfield Foods shareholders.
Starboard Value owns a 5.7-percent stake in Smithfield and has publicly expressed its opinion that the company would be more valuable if broken up into three operating units – domestic pork production, hog farming and international meat sales – that would be sold individually.
The 13-D filing added that Starboard would pay the advisors a fee should they find a way to raise the value of its Smithfield stock beyond the $34 a share featured in the deal with the Chinese pork processor.
A Smithfield Foods spokeswoman declined to comment on the Starboard Value activities when contacted this morning by Meatingplace.
Financing progresses
Separately, Smithfield announced plans by a Shuanghui subsidiary to sell $800 million in senior notes as part of proposed merger.
Sun Merger Sub Inc. will offer the notes to qualified U.S. institutional buyers, subject to market and other conditions. Plans call for the company to be absorbed into Smithfield once the merger closes.
Smithfield announced last week that the required waiting period under U.S. antitrust laws had expired, opening the door for the deal to possibly close in the second half of 2013.
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