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Smithfield Shareholder Calls for Breakup over Chinese Buyout

Smithfield Shareholder Calls for Breakup over Chinese Buyout

By Amanda Brodhagen,

One of the largest shareholders in Smithfield Foods Inc. is calling for a breakup instead of following through with a planned $4.7-billion takeover by Chinese meat processor, Shuanghui International Holdings Ltd.

The shareholder, Starboard Value LP who owns 5.7 percent stake in the company, suggests that Smithfield may be worth “well in excess” of the $34 per share deal offered by Shuanghui. Starboard has long advocated that segments of Smithfields operations are worth more separate than rolled in one.

In a letter addressed to Smithfield’s board, Starboard wrote, “we believe there are numerous interested parties for each of the company’s operating divisions, and that a piece-by-piece sale of the company’s businesses could result in greater value to the company’s shareholders than the proposed merger.”

Continental Grain Company, one of Smithfield’s former biggest investors had also called for a breakup of the company, but instead of picking a battle, sold off its entire stake in the company earlier this month.

Smithfield’s shares were up 2 percent in premarket trading on Monday, but were below Shuanghui offer.


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