THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, December 22, 1995 TAG: 9512220519
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: Medium: 56 lines
Smithfield Foods Inc. on Thursday completed its $58 million acquisition of Midwest pork packer John Morrell & Co. from Chiquita Brands International Inc., the companies announced.
The move essentially doubles the size of Smithfield Foods, making the hog producer and pork processor one of the two largest such companies in the nation.
Smithfield paid $25 million in cash and $33 million in common stock for Morrell, issuing about 1.1 million shares of stock to finance the buy.
Morrell's $1.4 billion in 1994 sales nearly match Smithfield's $1.5 billion in annual sales. With the addition of Morrell's plants - in Sioux Falls, S.D.; Sioux City, Iowa; Great Bend, Kan.; Cincinnati and Chicago - Smithfield will go head-to-head on the home turf of the nation's largest pork-producer: IBP Inc.
Nebraska-based IBP posted $12 billion in sales in 1994, but IBP - which once stood for Iowa Beef Producers - does not operate solely in the pork business. The Nebraska company produces beef and pork as well as operating leather tanning facilities.
The purchase of Morrell boosts Smithfield's daily slaughtering capacity from 40,000 hogs a day to 80,000, putting it on par with IBP's capacity.
Before purchasing Morrell, Smithfield had been slowly building its presence in the Midwest. Smithfield chief executive officer Joseph W. Luter III has said the company's expansion of its hog slaughtering operations would likely be in the Midwest rather than in North Carolina.
Smithfield's acquisition of Morrell has raised concerns in Iowa, where small hog farms have been driven out of business by massive, corporate contract farms. The noise over protecting small hog farms has grown to such a level that it has become an issue for candidates campaigning for next year's Iowa caucuses.
Sioux Falls residents also have been worried that Smithfield's increased slaughtering capacity might result in the closure of a packing plant that employs 3,000 workers.
``We will or will not make major investments in the Morrell facilities depending on how well received we are out there,'' Luter has said. MEMO: MOVING UP
With the purchase of John Morrell & Co., Smithfield Foods becomes one
of the two largest hog producing and pork processing companies in the
nation.
Total sales:
Smithfield Foods Inc. (with inclusion of Morrell): $2.9 billion
IBP Inc.: $12 billion
by CNB