Smithfield Foods, the world’s largest pork processor, said on Monday it will transfer part of its hog farming operations to a venture controlled by Murphy Family Ventures LLC as the Chinese-owned pork giant seeks to further streamline operations and reduce hog numbers as it prepares for a U.S. listing.
The Murphy-controlled business will assume ownership of 150,000 sows currently owned by Smithfield, while Smithfield will provide production, feed and transportation services, the Virginia-based company said in a statement.
According to the release, Murphy will become one of the largest independent pork producers in the U.S., with the capacity to produce approximately 3.2 million hogs annually for Smithfield’s fresh pork operation.
Smithfield President and CEO Shane Smith said in the release, ”With this agreement, we continue this transformation while ensuring a supply of hogs from a family farming operation.”Â
So, if you’re wondering why Smithfield chose this “family farm,” it’s important to note that members of the Murphy family were among the largest investors in Smithfield in the early 2000s. Remember, Smithfield was sold to Hong Kong-based WH Group Limited in 2013.Â
The transaction marks the return of the Murphy family as an independent hog producer more than two decades after it sold to Smithfield, the second largest US operation of its kind at the time.
The move also comes at a time when the pork giant is planning a New York share offering that is expected to value it at at least $5.4 billion.
Smithfield has over the past years shut hog farm operations, including in Arizona and California, as the cost of raising hogs increased relatively to pork prices. The company said the deal with the Murphy family adds to its streamlining push into value-added fresh pork and packaged meats.
Smithfield’s parent company, WH Group Ltd., recently stated that it wants to list up to 20 percent of Smithfield shares on the New York Stock Exchange or NASDAQ. The first proposals of a possible spin-off came in July 2024.
Last year, Smithfield said it would end contracts with 26 farms in Utah, permanently close 35 farm sites in Missouri and close a plant in North Carolina.
Murphy Family Ventures and Smithfield expect to close the transaction by the end of the year.
