Smithfield Foods Plans Public Stock Listing

Bloomberg’s Dong Cao reported Sunday that “the world’s biggest pork producer WH Group Ltd. is spinning off the US and Mexico businesses of Smithfield Foods Inc. and listing them in New York, it said in a Hong Kong stock exchange filing.”

“The announcement confirmed a Bloomberg News report Friday, which said WH Group has picked banks to arrange a US share sale to raise at least $1 billion,” Cao reported.

The Wall Street Journal’s Patrick Thomas reported that “the details of the spinoff have yet to be finalized, but WH said it expects Smithfield U.S. and Mexico will remain a subsidiary of the company. The plan requires approvals from Hong Kong’s stock exchange as well as the U.S. Securities and Exchange Commission.”

“Smithfield’s return to the public markets in the U.S. comes as pork processors are looking to improve their profits after a brutal 2023, grappling with an oversupply of pork from flat demand domestically,” Thomas reported. “A Smithfield listing this year would come during what has been a choppy IPO market. StubHub recently pushed back the launch of its initial public offering until at least September, the Journal reported, as fears about softening consumer sentiment are on the mind of many investors.”

SwineWeb’s Jim Eadie reported Monday that, despite the difficult time in the IPO market, “industry analysts anticipate that Smithfield’s public offering will attract considerable interest from investors. The move reflects a broader trend of agricultural and food companies seeking to capitalize on public markets to fund growth initiatives.”

“As Smithfield prepares for this significant milestone, the agricultural sector will be closely watching how the IPO unfolds and its impact on the industry,” Eadie reported. “This development underscores the dynamic nature of the global food market and the ongoing evolution of key players within it.”

WH Group Chooses Banks for IPO Listing

Bloomberg’s Cao, Pei Li, Dave Sebastian and Ryan Gould reported late last week that “the company is working with Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley on the planned listing.”

“The move comes as Smithfield is seeking to restore profits after its pork business grappled with lackluster demand last year,” Cao, Li, Sebastian and Gould reported. “The company closed a plant in North Carolina and plans to shutter another one in Iowa to help streamline operations. It also boosted investments in automation as it seeks to weather tight labor supplies.”

“WH Group posted revenue of about $26 billion in 2023, with net income of $606 million versus $1.4 billion the previous year, its annual report shows,” they reported.

However, Thomas reported that “lower grain costs this year for livestock feed is expected to boost meat companies’ bottom lines. For the three months that ended March 31, WH said its U.S. and Mexico business, which includes Smithfield operations, made an operating profit of $191 million, up from $62 million the prior year.“