COFCO, China's major national agricultural and food processing company, has purchased a 4.95 per cent stake in U.S.-based Smithfield Foods Inc, Chinese and American media report.
At the current stock price of USD17.45, the deal is valued at USD122m.
Smithfield stock dropped more than 12 per cent on Tuesday. The American
company needs "the proceeds to fund planned convertible note hedge and
warrant transactions and to pay down debt", Forbes writes.
A COFCO spokesperson said the deal makes sense because the COFCO wishes
to acquire the "advanced technology and management skills of the U.S.
company". It is also expected that COFCO's Chairman, Ning Gaoning, will
be elected to Smithfield's board.
C. Larry Pope, Smithfield's President and CEO, sees benefits for both
sides. "COFCO has introduced Smithfield to many opportunities in China, and we look forward to continue working together."
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