June 17 (Bloomberg) -- Smithfield Foods Inc., the U.S. hog producer that agreed to a $4.7 billion acquisition by Shuanghui International Holdings Ltd. in May, was urged by investor Starboard Value LP to split itself up instead.
Starboard holds a stake of about 5.7 percent in Smithfield and a breakup may value the world’s largest hog producer at about $44 to $55 a share, compared with the $34-a-share offer from Shuanghui, Starboard said today in a statement.
Smithfield faced similar demands in March from shareholder Continental Grain Co. as rising animal-feed costs made hog production unprofitable. Continental said in April a breakup into three businesses would achieve a stock price of $40 within three years. It subsequently backed the bid from Shuanghui, and plans to exit its holding after the transaction.
Smithfield has attracted interest from China as the country’s growing middle class boosts pork consumption. A takeover by Hong Kong-based Shuanghui would be the biggest Chinese purchase of a U.S. company and follows a string of global food and agriculture-related purchases. Smithfield and Shuanghui said May 29 they expected the deal to close this year.
Starboard’s call to consider a breakup was reported earlier by the Wall Street Journal.
Smithfield’s livestock unit raises about 15.8 million hogs a year, according to the company’s website. It owns 460 farms and has contracts with 2,100 others across 12 U.S. states.
Shares in the Smithfield, Virginia-based company closed at $32.80 on June 14 in New York.
--Editors: Amanda Jordan, Tony Barrett
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