Smithfield Foods Inc. is in talks to buy a controlling interest of the European packaged meats company Campofrio Food Group SA for 9.5 euros ($13.62) per share.

Smithfield, a pork processor and hog producer, and Campofrio Chairman Pedro Ballve are considering takeover bid for an approximately 50 percent stake of Campofrio. Smithfield currently owns 37 percent of the business.

No financing arrangements have been finalized, but Smithfield said Wednesday that it expects the estimated 500 million euros ($716.7 million) needed for the offer would be provided through a combination of existing liquidity and capital market financings.

Last month Smithfield Foods reported that its third-quarter net income climbed on strong pork demand and the benefit of a large insurance claim recovery. But the company also said it would likely face higher costs over the summer, which will mean higher pork prices for consumers.

Shares of Smithfield Foods, based in Smithfield, Va., dropped 91 cents, or 3.8 percent, to $23.13 in afternoon trading. The stock has traded in a range of $13.34 and $24.93 over the past year.

Copyright 2011 The Associated Press.