Smithfield Foods Releases Proxy with Some Interesting Information

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Smithfield Foods Releases Proxy with Some Interesting Information
See page for author [Public domain], via Wikimedia Commons

Via Jay Gold, CFA of JPMorgan… After the close yesterday, Smithfield Foods, Inc. (NYSE:SFD) a proxy statement (link) related to its proposed acquisition by China-based Shuanghui. We find three particular areas of interest: 1) The narrative recounting events leading up to the deal, which we summarize herein; 2) The revelation that during the courtship with Shuanghui, Smithfield bid on (and was rebuffed by the owner of) a large packaged meats business; and 3) Smithfield’s belief – at least in the documents it used during merger discussions – that it would earn ~$3 in EPS this year, versus the consensus $2.59. We normally would not place much value in an EPS estimate issued during a merger negotiation; however, in Smithfield Foods’s 10-K, which also came out yesterday, Smithfield Foods seemed to suggest even ~$3 might be conservative.