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March 7 (Reuters) - Continental Grain Co, one of the biggest shareholders of Smithfield Foods Inc, has sent a letter to the board urging it to consider splitting the leading U.S. hog producer into three units.
In a letter filed with the U.S. Securities and Exchange Commission on Thursday, Continental Grain also said Smithfield should consider initiating a regular cash dividend.
"There should be a regular dividend along the lines of what competitors like Hormel or Tyson pay, which would encourage a more stable shareholder base, while returning capital to shareholders," Continental Grain, which owns about 6 percent of Smithfield stock, said in the letter.
It noted that since the current Smithfield management took over in mid-2006, the company's stock has declined by 26 percent while, including dividends, Tyson has returned about 70 percent and Hormel has returned 131 percent.
The shareholder said it was willing to meet with Smithfield's board and management to discuss its plan for the company.
Paul Fribourg, the head of Continental Grain Co, quit Smithfield's board in September 2009 over a disagreement with the company's plan at the time to issue $250 million worth of shares of common stock.
Smithfield Foods, the nation's largest pork processor and hog producer, could not immediately be reached for comment by Reuters outside of regular U.S. business hours.
Privately-held Continental Grain, which was established in 1813, invests in agribusiness in the United States and internationally.