HONG KONG – Smithfield Foods Inc. has sold its entire equity interest in Campofrio Food Group to Alfa for $354 million in cash. Alfa is a diversified investment firm in Mexico with subsidiaries that include Monterrey, Mexico-based Sigma Alimentos and Bar-S Foods Company, which it acquired in 2010. Alfa also owns businesses in the IT and automotive parts industries. Smithfield President and CEO C. Larry Pope said the deal was done in part to strengthen the company’s balance sheet and reduce its financing costs.
Smithfield, a wholly owned subsidiary of WH Group Limited, said the sale represents approximately 37 percent of the entire issued share capital of Madrid, Spain-based Campofrio, which has 25 plants in eight countries.
“This transaction reflects Smithfield’s commitment to continually review our portfolio and generate cash to support our long-term priorities,” Pope said in a press release.
WH Group Chairman and CEO Wan Long said in a statement that the transaction will further strengthen WH Group’s financial fundamentals and capital structure, and lay a solid foundation for future development and global expansion. WH Group Limited is the largest pork company in the world.
“We will uphold our global expansion strategy to further strengthen our leadership in the global pork industry,” he added. “With the European Union remaining a strategic focus, we will tap growth from the ongoing development of our existing platform there, as well as from continuing to identify potential strategic acquisitions.”
Smithfield’s European operations include businesses in hog production, meat processing and packaged meats in both Poland and Romania. These operations achieved record highs in their financial results in the latest reporting period.