UPDATE 2-Smithfield to sell stake in Butterball

* Smithfield to sell Butterball stake to JV partner

* Sale should net Smithfield about $175 million.

* Smithfield to use proceeds to pay down debt
(Recasts, adds details)

CHICAGO, Sept 10 (BestGrowthStock) – Pork producer Smithfield Foods
Inc (SFD.N: ) said on Friday it will sell its 49 percent stake
in turkey producer Butterball LLC to its joint venture partner
for about $175 million.

Smithfield and Maxwell Farms LLC have jointly owned the
Butterball brand since 2006. The sale should be completed by
the end of the year and Smithfield will use the proceeds to pay
down debt.

Maxwell Farms will then sell half of Butterball to
agriculture company Seaboard Corp (SEB.A: ). Late on Thursday,
Seaboard said it had reached a deal to buy 50 percent of
Butterball in partnership with Maxwell Farms.

“We are pleased to be partnering with Seaboard and moving
forward as the buyer of Butterball, the strongest brand in the
turkey industry,” Walter Pelletier, president of Maxwell Farms,
said in Thursday’s statement.

Earlier this week Smithfield Foods had said it would likely
sell its 49 percent stake in the joint venture. Smithfield had
unsuccessfully tried to buy the remaining 51 percent for about
$200 million.

“As previously stated, our minority ownership position in
Butterball did not permit us to execute the growth strategy
that we believe was necessary to fully develop the company to
its potential. Accordingly, we are exiting the business, and
will use the sale proceeds to further delever our balance
sheet,” Smithfield CEO C. Larry Pope said in Friday’s
statement.

“While largely expected, we believe that the sale of the
Butterball turkey business would be a positive catalyst for
Smithfield shares. Turkey is a noncore business for
Smithfield,” Stephens Inc analyst Farha Aslam said in a note
prior to Smithfield’s announcement.

In morning trade, Smithfield shares were off 1.9 percent to
$16.61 and Seaboard shares were up 1.3 percent to $1680.00.
(Reporting by Bob Burgdorfer, editing by Gerald E. McCormick)

UPDATE 2-Smithfield to sell stake in Butterball