Bacon Maker Smithfield Foods IPO Tips Scales at $11B with Eye on Growth
Tuesday, Jan 21, 2025 8:21 am ET
3min read 
Smithfield Foods, the world's largest pork producer, is set to make a splash in the public markets with an initial public offering (IPO) that could value the company at up to $11 billion. The Virginia-based company, owned by China's WH Group, plans to sell 17.4 million shares at a price range of $23 to $27 per share, with the midpoint valuing the company at $10.7 billion.
Smithfield's IPO comes at a time when the pork industry is facing pricing pressures and mounting public scrutiny over U.S. companies' ties to China. However, the company's strong financial performance and growth prospects have investors eager to get a piece of the action. In the nine months ending September 29, 2023, Smithfield reported gross profits of $1.4 billion, more than double the $604 million reported in the same period in 2023.
SWBI Gross Profit
Smithfield's IPO also comes with a unique ownership structure. WH Group, which acquired Smithfield in 2013, will retain a majority stake of approximately 91% in the company after the IPO. This means that strategic decisions will continue to be influenced by a Chinese entity, which could raise concerns about foreign ownership and control of a major U.S. food producer. However, Smithfield's IPO will provide the company with access to public capital markets, allowing it to raise funds for expansion and investment in infrastructure, automation, and production capacity.
Smithfield's growth strategies include expanding its packaged meats capacity, investing in infrastructure and automation, and focusing on packaged meats to mitigate the impact of volatile pork prices. The company also plans to use the proceeds from the IPO to further invest in these areas, as well as for general working capital purposes.
In conclusion, Smithfield Foods' IPO is a significant milestone for the company, with a valuation of up to $11 billion reflecting its strong financial performance and growth prospects. While the company's ownership structure may raise concerns about foreign influence, Smithfield's IPO will provide it with access to public capital markets and the flexibility to navigate challenging economic environments. With a focus on packaged meats and investment in infrastructure and automation, Smithfield is well-positioned to continue its growth trajectory and create value for shareholders.
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