Smithfield Foods has sent a letter requesting a meeting today to discuss the possible combination of Smithfield Foods and Famland’s Refrigerated Foods Group, which includes their beef and pork processing units.
Smithfield said that is was prepared to deliver full value to Farmland in any such transaction and to advance the funds to Farmland to enable them to pay the required principal to their lenders due today.
The proposal was outlined in the letter from Smithfield as follows:
- We are prepared to meet (May 31) to discuss a business combination involving your Refrigerated Foods Group or, if you prefer, your entire company. Subject only to our prior review of a current balance sheet for the business, we will be prepared to execute a letter of intent regarding our purchase of the Refrigerated Foods Group or the entire company that would include a definitive cash price reflecting full value. We would welcome the involvement of your lenders at that meeting, who would be assured about the seriousness of our proposal, our commitment to deliver full value and our willingness to proceed quickly.
- Upon our execution of a letter of intent, and subject to any required consents of your bank group, we are prepared to make available to Farmland a line of credit to enable you to meet your short-term liquidity needs, including the $10 million of principal payable to your banks tomorrow.
- We are prepared to pay full and fair value for your assets. Toward that end, we understand that any definitive agreement will include a customary “market check to ensure that Farmland is obtaining the best price available for the business.
- We are prepared to be flexible and creative to effect a mutually beneficial transaction. Among other things, we are amenable to exploring an opportunity for U.S. Premium Beef and its members to continue to participate in the future of Farmland National Beef Packing Co. by retaining an equity interest.
- We are prepared to discuss various structural alternatives for combining our businesses that would minimize or defer the tax consequences for Farmland and its members, if any. We also believe there are other potential long-term business relationships (such as supply agreements) that could be developed between Smithfield and Farmland'’ remaining operations for our mutual benefit.
Farmland had no official comment, but has stated that the meat business is not for sale.