According to a filing with the Securities and Exchange Commission, the Seaboard agreement includes Butterball’s acquisition of the live turkey production operations of the Maxwell Group and of Murphy-Brown LLC, a subsidiary of Smithfield Foods, Inc. Smithfield previously owned 49% interest in Butterball, but confirmed on Sept. 10 the sale of its interest for a buyout of approximately $175 million. Seaboard’s purchase is expected to close by Dec. 10, 2010 and includes a commitment of $100 million of subordinated financing to Butterball and the availability of an additional $300 million in senior secured credit facilities if Butterball does not obtain third-party financing.
“Butterball is an iconic brand name in the United States, representing superior quality, outstanding value and excellent customer service,” said Steve Bresky, president and chief executive officer of Seaboard. “We look forward to our participation with the Butterball management team and the Maxwell group and bringing additional value to Butterball.”
“We are pleased to be partnering with Seaboard and moving forward as the buyer of Butterball, the strongest brand in the turkey industry,” said Walter Pelletier, president of Maxwell Farms, L.L.C. “Seaboard is a strong, diversified company with a great reputation in the agriculture and food industries, and we are confident the partnership will be mutually beneficial for both companies.”
C. Larry Pope, president and chief executive officer of Smithfield, reiterated previous sentiments that Smithfield was interested in either buying the remaining 51% in Butterball or selling its share in the venture.
“Our minority ownership position in Butterball did not permit us to execute the growth strategy that we believe was necessary to fully develop the company to its potential,” he said. “Accordingly, we are exiting the business, and will use the sale proceeds to further deliver our balance sheet.”