Shares of Smithfield Foods (NYSE:SFD) climbed almost 4% in Friday morning trading after the company’s largest shareholder said it should divide its operations.
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) and Hormel (NYSE:HRL) 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, packaged by one of its subsidiaries.