Smithfield Foods, Inc. has announced an agreement in principle to acquire Packerland Holdings, Inc., the fifth largest beef processor in the United States, for $250 million.
Terms of the agreement call for Smithfield Foods to acquire 100 percent of the outstanding capital shares of Packerland in exchange for approximately 3.2 million shares of Smithfield common stock and the assumption of approximately $118 million in debt and other liabilities. Based in Green Bay, WI, Packerland is privately held by management and an outside investor.
Packerland currently has a daily processing capacity of 6,150 head and represents approximately five percent of the beef industry capacity. Richard Vesta, president and chief executive officer of Packerland, will be continuing in that capacity under Smithfield ownership.
“I could not be more excited about the opportunities for the newest company in the Smithfield family, particularly under the leadership of Rich Vesta,” said Joseph W. Luter III, chief executive officer of Smithfield Foods. “He knows the business, has 30 years of experience in the industry, and will be a valuable member of the Smithfield team.”
Smithfield Foods made its first acquisition in the beef industry in June when it purchased Moyer Packing Company, which has sales of $600 million. Moyer has a daily processing capacity of 2,375 head and about a two percent share of industry capacity. The combination of Packerland and Moyer will add a new beef processing division to the company, with more than $2 billion in annual sales, representing approximately 20 percent of total sales, and a seven percent share of the U.S. beef industry.
Packerland has 4,000 employees and plants in Green Bay, WI; Plainwell, MI; Tolleson, AZ, and Gering, NE. The management of both companies emphasized that operations will not be affected by the change in ownership.
October 2001 Render