By Kimberley Kao
Smithfield Foods, the U.S.'s largest pork producer, raised about $521.7 million in its initial public offering after pricing shares below its marketed range.
Smithfield, owned by China's WH Group, late Monday priced its IPO of 26.9 million shares at $20 each, lower than the indicated range of $23 to $27 a share the company gave last week.
Half of the shares will be issued by Smithfield. The other half will be sold by shareholder WH Group, the world's largest pork-producing company by sales.
Smithfield also gave underwriters of the offering a 30-day option to purchase up to about 3.9 million additional shares from the selling shareholder.
WH Group acquired Smithfield in 2013 in a $4.7 billion deal that marked one of the biggest takeovers of an American business by a Chinese company at the time. The combined company went public in Hong Kong the following year.
In a separate filing to the Hong Kong exchange Tuesday, WH Group said its chairman, Wan Long, agreed to purchase $64 million, or about 12.3%, of the Smithfield shares being offered.
Fitch Ratings analysts said in a note that the spinoff will widen WH Group's rating headroom slightly and strengthen its financial profile. It noted that the IPO will reduce the Chinese pork producer's ownership of Smithfield to 89.9% from 100%.
"We also expect a gradual shift away from the upstream U.S. hog production business to reduce volatility in financial performance and bolster its credit profile in the long term," Fitch said.
Smithfield said it generated sales of $14.2 billion and adjusted earnings before interest, taxes, depreciation and amortization of $1.3 billion for the 12 months ended Sept. 29, 2024.
Morgan Stanley, BofA Securities and Goldman Sachs & Co. are leading Smithfield's IPO.
Shares of the Virginia-based company are expected to begin trading on Nasdaq under the symbol SFD on Tuesday.
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
January 28, 2025 02:03 ET (07:03 GMT)
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