Pork producer Smithfield Foods to sell stake in Butterball

Smithfield to sell its stake in Butterball

RICHMOND, Va. — Smithfield Foods will sell its stake in Butterball, the company said Friday, unloading the nation’s top-selling brand responsible for 20 percent of all turkeys produced in the United States.

Smithfield’s joint venture partner in Butterball, Maxwell Farms, will buy its 49 percent interest and sell a 50 percent stake to Seaboard Corp. for $177.5 million in cash, according to a filing with the Securities and Exchange Commission.

Butterball produces more than 1 billion pounds of turkey each year.

Smithfield, the nation’s largest pork producer, said it estimates net proceeds from the sale of about $175 million, which will be used to reduce debt. The deal is expected to take place before the end of the year.

“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,” Chief Executive C. Larry Pope said.

The Smithfield, Va., company had said in June that it either needed full control of Butterball LLC or to cash out of the venture. It had offered Maxwell Farms $200 million for its stake.

At that time, Pope said Smithfield had long wanted Maxwell Farms to invest more in Butterball to upgrade its facilities, business and marketing. The company had set a September deadline for Maxwell Farms to decide whether it will sell its stake in Butterball or buy Smithfield’s.

Maxwell Farms and Butterball are based in North Carolina. Butterball has 5,500 employees at its seven plants and headquarters. Its 675,000-square-foot facility in Mt. Olive, N.C., is the world’s largest turkey plant.

Shares of Smithfield Foods Inc. fell 32 cents, or 1.9 percent, to $16.61