News | May 10, 1999

Same Pigs, New Name: Smithfield Acquires Carroll's

Smithfield Foods Inc. today announced the completion of its Carroll's Foods Inc. acquisition, which Smithfield claims makes it the largest hog producer in the world in addition to its existing claim to be the largest pork processing company in the world.

Smithfield's long-term strategic goal is to continue its drive to increase its level of vertical integration to approximately 30% from its prior level of approximately 14%. The company plans to produce approximately 5.6 million hogs and process approximately 19 million hogs in fiscal 2000.

"This single transaction accomplished what the company had otherwise hoped to achieve in added hog production over the next five to 10 years," said Joseph Luter, III, chairman and CEO of Smithfield Foods. The added hog production is hope to insulate the company from the effects of major market swings in hog prices and fresh pork margins. There are no plans to increase U.S. hog production.

Smithfield acquired Carroll's for 4.2 million shares of Smithfield common stock and the assumption of approximately $231 million in debt, plus other liabilities. The acquisition includes all capital stock of Carroll's Foods, Inc.; Carroll's 50% interest in Smithfield-Carroll's; Carroll's 16% interest in Circle Four; Carroll's 50% interest in Tar Heel Turkey Hatchery, 100% of Carroll's turkey grow-out operation, Carroll's 49% interest in Carolina Turkeys, and certain hog production interests in Brazil and Mexico.

Smithfield acquired Carroll's for 4.2 million Smithfield common stock shares and the assumption of approximately $231 million in debt, plus other liabilities. Bottom line, that's substantially less than the $500 million transaction value contained in the letter of intent executed by the parties on February 25.

Smithfield Foods, a major marketer of fresh pork and processed meats, includes among its brands Smithfield Lean Generation Pork, Smithfield Premium, Gwaltney, John Morrell, Patrick Cudahy, Lykes, Esskay, Kretschmar, Valleydale, Jamestown, Dinner Bell, Realean, Patrick's Pride, Great, Tobin's First Prize, Peyton's, Curly's, Ember Farms and others.

Carroll's Foods, based in Warsaw, NC, is the second largest hog production company in the U.S. Smithfield-Carroll's is a hog production partnership with Smithfield Foods, headquartered in Waverly, WV. Circle Four is a hog production partnership with Smithfield Foods headquartered in Milford, UT. Carolina Turkeys is a turkey rocessing partnership with Maxwell Farms Inc., Mount Olive, NC, which produces approximately 290 million pounds of fresh turkeys and approximately 110 million pounds of processed turkey meats annually.