Smithfield Foods is willing to pay approximately $200 million to buy out its joint venture partner's 51% ownership interest in Butterball LLC and its partners' related turkey production assets. In accordance with Butterball's operating agreement, Smithfield's partner may either accept the offer to sell or be required to purchase Smithfield's 49% interest and its related turkey production assets.
If the purchase is consummated Smithfield anticipates that a significant amount of capital investment and marketing will be necessary to increase Butterball's earnings potential. The company expects to conclude the buy or sell decision no later than September and close before the end of the calendar year. Butterball's debt obligations total about $215 million.
Smithfield President and CEO Larry Pope says Butterball needs to be restructured operationally and that takes capital. He says they haven't been able to secure the capital from either partner to make it work. Smithfield believes its current liquidity position will be sufficient to finance this transaction.