Smithfield Foods Inc. (SFD) Chief Executive C. Larry Pope could
receive more than $46 million in potential merger-related payments
after helping to orchestrate his company's sale to China's
Shuanghui International Holdings Ltd. for $4.7 billion.
According to a proxy filed by Smithfield on Tuesday with the
U.S. Securities and Exchange Commission, Mr. Pope will receive
nearly $28 million in cash and $18.6 million in equity.
The proxy also disclosed the history of the deal. Smithfield
said it had been contemplating since January a potentially
significant acquisition of a large business in the packaged meats
sector.
A couple months later, Continental Grain Co., then a major
Smithfield shareholder, shook the cage and urged Smithfield to
split up into three parts. Smithfield's board decided against a
break-up, but Continental Grain's agitation made other companies
take notice.
Shuanghui's financial advisor Morgan Stanley (MS) in March
called Smithfield with an unsolicited offer to acquire the company
for $30 a share, which Smithfield rejected. Shuanghui then
increased its offer to $33 a share and indicated it was very
focused on keeping Smithfield's existing management in tact after
the close of a merger.
A few days later, Smithfield made an offer for a large meat
company, which was formally rejected by the target in April.
Smithfield in late May then ultimately agreed to be acquired by
Shuanghui at $34 a share.
Following the deal's announcement, Continental Grain sold out of
its Smithfield stake, saying it was satisfied with its investment
return. However, another activist investment fund Starboard Value
LP recently disclosed a 5.7% stake in Smithfield and is now
pressuring the company to explore a breakup.
Smithfield shares were up 1.5% to $33.50 in after hours
trading.
-Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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