Smithfield Completes Sale to JBS

Smithfield Foods, Inc. (NYSE: SFD) announced it has completed the previously announced sale of Smithfield Beef Group, Inc. ("Smithfield Beef"), its beef processing and cattle feeding operation, to JBS S.A. (Bovespa: JBSS3) for $565 million in cash.

The sale included 100 percent of Five Rivers Ranch Cattle Feeding LLC ("Five Rivers"), which previously was in a 50/50 joint venture with Continental Grain Company ("Continental Grain"). Immediately preceding the closing of the JBS transaction, Smithfield Beef acquired Continental Grain's 50 percent investment in Five Rivers for 2,166,667 shares of Smithfield Foods' common stock.

Smithfield Foods expects that the net proceeds of the JBS transaction (consisting of $565 million received at closing, plus approximately $150 million in net proceeds from the sale of the retained cattle inventory post-closing after payment of associated debt) will be used primarily for debt reduction.

"This transaction is significant for our shareholders," said C. Larry Pope, Smithfield Foods president and chief executive officer. "We have dramatically improved our liquidity to about $900 million, which should help us weather the difficult markets ahead. Our balance sheet is much stronger today. Additionally, we have exited the beef business, where we had a small market share and little potential to grow," he said.

As previously announced, the transaction excluded substantially all live cattle inventories held by Smithfield Beef and Five Rivers as of the closing date, together with associated debt. The excluded live cattle will be raised by JBS after the closing for a negotiated fee and sold at maturity at market-based prices.

The sale is subject to customary post-closing adjustments, including adjustments for differences in working capital at closing from agreed-upon targets.

Smithfield Foods' legal advisors in connection with the transaction were Hunton & Williams LLP and Simpson Thacher & Bartlett LLP, who advised on antitrust and regulatory matters.

With sales of $11 billion, Smithfield Foods is the leading processor and marketer of fresh pork and packaged meats in the United States, as well as the largest producer of hogs. For more information, visit http://www.smithfieldfoods.com.