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209782

Smithfield Buying Farmer John

Smithfield Foods, Inc. announced today it has begun the process to acquire Clougherty Packing LLC from Hormel Foods Corporation. Through this agreement, which is expected to be complete within a month pending closing conditions and regulatory approvals, Smithfield will add the Farmer John and Saag’s Specialty Meats brands to its lineup as well as two processing facilities and three farms (with about 30,000 sows total) to its operations.

“By folding Farmer John into our operations, we are better positioned to take advantage of our long-term strategic growth goals, which includes an increasingly diversified customer and consumer base and greater supply chain efficiency,” said Kenneth M. Sullivan, president and CEO of Smithfield Foods. “As we continue this transition and expand our operations, we are proud to welcome these new West Coast employees into our growing Smithfield family.”

Clougherty Packing LLC is based in southern California and is a leading integrated producer and processor of a full line of branded pork products. Founded in 1931, Farmer John is the No. 1 bacon and sausage brand in southern California. Saag’s Specialty Meats is a premium brand of deli meat and specialty sausage made without any artificial flavors, colors, fillers, extenders, or MSG.

Along with two California-based processing facilities, Smithfield will acquire three PFFJ LLC farms located in Arizona, California, and Wyoming. The purchase will bring Smithfield’s total sow count in the U.S. to about 910,000. 

The purchase price for Clougherty Packing LLC is $145 million, pending capital adjustments at closing. 

Farmer John harvests approximately 7,400 hogs per day and, in fiscal 2016, the businesses accounted for approximately $500 million in sales, reported Hormel.

“While the businesses have performed well, they no longer align with our company’s growth strategies,” said Jim Snee, president and chief executive officer. “This divestiture also allows for the integration of the pork processing facility at Farmer John with the majority of the live production operations that supply the facility, and are currently owned by Smithfield. We will work together to ensure a smooth transition for our employees and customers.”

Hormel still owns a Colorado sow system. It has capacity for about 25,000 sows, but the company has been doing a herd health cleanup and a group sow conversion, so the farm has about 22,000 sows currently.

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