Starboard Seeking Better Offer For Smithfield

Sep 4 2013 | 12:28pm ET

Hedge fund Starboard Value said yesterday that it has had some success in drumming up interest for a more lucrative deal for pork-producer Smithfield Foods.

The New York-based activist investor, which owns 5.7% of Smithfield, said it had received "nonbinding written indications of interest" from potential buyers which would pay "substantially" more than the $4.7 billion offered by China's Shuanghui International Holdings.

Starboard said in the letter to Smithfield shareholders that it would vote against the Shuanghui deal on Sept. 24 to allow a better offer to materialize—unless it can convince Smithfield to delay the special meeting.

Starboard has spoken with the Blackstone Group and other meat-processing companies about making a bid for the company, Bloomberg News reported last week. The all-cash offer—Shuanghui said yesterday that it has secured the roughly $4 billion in loans it requires to close the deal—could be considered a superior offer.

The deal with Shuanghui must be completed by Nov. 29.

"It is our belief that the proposed merger undervalues Smithfield and that with more time an alternative proposal to the board at a superior price for shareholders could become available," Starboard wrote. The hedge fund has previously pushed to split the company into three, a move it said would increase Smithfield's value by about two-thirds.

Starboard did concede that if a better offer were not forthcoming, it would back the Shuanghui bid.

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