Smithfield Foods Under Pressure to Split Into Three

by Christopher Freeburn | March 8, 2013 12:19 pm

Smithfield[1]Shares of Smithfield Foods (NYSE:SFD[2]) climbed almost 4% in Friday morning trading after the company’s largest shareholder said it should divide its operations[3].

In a letter to Smithfield’s board, privately-held Continental Grain, which owns 6% of Smithfield shares, advised breaking up the nation’s largest pork producer into three units and also urged the company to start paying a regular cash dividend, Reuters noted.

Continental pointed out that companies like Tyson Foods (NYSE:TSN[4]) and Hormel (NYSE:HRL[5]) pay regular dividends. Doing so would return cash to company investors and “encourage a more stable shareholder base.”

In 2009, Continental’s CEO Paul Fribourg left Smithfield’s board after the company issued $250 million in new common shares.

Last month, Smithfield recalled 38,000 pounds of pork sausage over concerns that small bits of plastic might have contaminated the meat,[6] packaged by one of its subsidiaries.

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