Activist investor urges break-up of Smithfield instead of takeover-WSJ

June 17 Mon Jun 17, 2013 12:37am EDT

June 17 (Reuters) - Starboard Value LP, a large activist investor in Smithfield Foods Inc, is pressuring the company to explore a break-up rather than go ahead with a planned $4.7 billion takeover by a Chinese meat producer, the Wall Street Journal reported.

Starboard says a broken-up Smithfield could be worth $44 to $55 per share, compared with the $34-per-share price offered by Shuanghui International Holdings in what would be the China's largest purchase to date of a U.S. company. ()

In a letter to the Smithfield board, expected to be delivered by Monday and which was reviewed by the Journal, Starboard Value said it has taken a 5.7 percent stake in Smithfield and that the firm would be worth more if it were broken up into three divisions and then sold.

The proposed divisions are U.S. pork production, hog farming and international sales of fresh and packaged meats.

Starboard's call for a break-up echoes an earlier one from Continental Grain Co, which later dropped its demand after Shuanghui International Holdings moved in to buy the world's largest hog farmer and pork processor.

Starboard's 5.7 percent stake would catapult it past Vanguard Group Inc, which was the largest investor in Smithfield with 4.6 percent stake as of March 31, according to Thomson Reuters data.

Shuanghui and Smithfield declined to comment to the Journal. None of the parties could immediately be reached for comment by Reuters outside of regular U.S. business hours.