DOW JONES NEWSWIRES Smithfield Foods Inc. (SFD) said it is in discussions with Pedro Ballve, chairman of Campofrio Food Group SA (CFG.MC, CAOFF), to buy the half stake they don't already own in the European meat producer. The pork-producing giant said it was in discussions with Ballve and evaluating a takeover bid to buy the 50% stake in Campofrio for EUR9.5 (about $13.59) a share. The half stake is valued at about $700 million, and Smithfield said that although financing arrangements haven't been finalized, it anticipates the about EUR500 million ($710 million) to fund the takeover would come from existing liquidity and capital-markets financings. Shares of Smithfield were down 3.4% to $23.23 in recent trading. The stock has risen 12% so far this year. The acquisition would give Smithfield an 87.6% stake in Campofrio, up from the 37% stake it holds now. "The acquisition of Campofrio would further Smithfield's long-term strategy of becoming a leading global consumer packaged meats company," said Smithfield President and Chief Executive C. Larry Pope. He noted that the company also was looking at "potential synergies relating to sales, operations and raw materials with both our U.S. and international businesses." Campofrio is the biggest producer of processed meat products in Europe. On Tuesday, Moody's Investors Service upgraded the company, citing better operating performance of late. Smithfield has reported soaring profit of late, helped by solid revenue growth on higher prices. Last month, the company said its fiscal third-quarter profit soared as sales climbed and the company booked a $120.6 million gain on a fire-insurance recovery. -By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com
