Smithfield Foods Inc. recently launched its initial public offering (IPO), raising $522 million. However, shares were priced lower than expected, selling at $20 each instead of the anticipated range of $23 to $27.
As the largest pork producer in the world and a subsidiary of WH Group Ltd. from Hong Kong, Smithfield offered around 26 million shares. Despite the IPO, WH Group will continue to hold control over Smithfield.
This IPO indicates a positive shift in the U.S. market, which has seen a recovery in share sales. In 2023, first-time sales reached $43 billion, a significant increase from the previous year, though still lower than the average pre-pandemic levels.
Smithfield is known for several popular brands, including Eckrich and Nathan’s Famous. They produce packaged and fresh pork, and also have their own hog production business, which supports their meat supply.
For the first nine months of the year ending September 29, Smithfield reported a net income of $581 million on $10.2 billion in revenue, a turnaround from a net loss of $2 million the previous year.
In preparation for the IPO, Smithfield streamlined its operations. In August, the company separated its European operations into a new entity. Recently, they transferred parts of their hog farming to a new venture and sold some of their farming assets in Utah and Missouri.
Smithfield’s parent company is led by Wan Long, who has an estimated wealth of over $3 billion. At 84 years old, Wan has a remarkable history, starting his career in a cold storage facility before establishing what became a multinational operation, starting with a public listing in 1998. In 2013, WH Group acquired Smithfield for $4.7 billion, marking the largest purchase of a U.S. firm by a Chinese company at that time.
Smithfield has faced challenges, particularly regarding labor issues and antitrust claims. They’ve had to pay settlements totaling $194 million in lawsuits over industry violations. Additionally, they are cautious about potential new immigration policies that may impact their labor-intensive operations.
The IPO is being led by top financial institutions, including Morgan Stanley and Goldman Sachs, and Smithfield will be listed on the Nasdaq under the symbol SFD.
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Bloomberg, Smithfield Foods, WH Group, initial public offering, Bloomberg Billionaires Index
