Smithfield and Campofrío: Merger of Equals Approved

EU - The shareholders' meeting of Campofrío Alimentación S.A. and the shareholders meeting of Groupe Smithfield Holdings S. L. approved a merger of equals on October 24.
calendar icon 31 October 2008
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In order to carry out the integration, by means of absorption of Groupe Smithfield by Campofrío, the shareholders of Campofrío have approved the capital increase by issuing 49.577.099 shares to be delivered to the shareholders of Groupe Smithfield.

Once the process is finalized, the shareholders of the company, which will be called Campofrío Food Group, will include Smithfield Foods (37%), Oaktree Capital (24%), Pedro and Fernando Ballvé (12%), Díaz Family (5%), Caja Burgos (4%) and QMC (2%).

Following the decision of both shareholders meetings, the CNMV must authorize the exemption of Smithfield Foods to launch a takeover bid on Campofrío's shares, since it will exceed threshold of the 30% of the voting rights established by law, under article 8 g) of the Royal Decree 1066/2007.

In addition, the shareholders meeting of Campofrío has approved the allocation of a special dividend worth €47.2 million, which implies the distribution of €0,8956 per share adjusted by the increase of the treasury stock . This dividend was proposed as a result of the sale of the Russian subsidiary Campomos and will be paid to all those who are Campofrío's shareholders on October 31st. The dividend, the most significant proposed so far by Campofrio, will be subject to the effectiveness of the merger and will be distributed before 30th of June 2009.

European leader in the processed meat industry

This merger of equals, between Campofrío and Groupe Smithfield, results in the creation of a leading European company in the processed meat industry and one of the five largest worldwide with a turnover of €2.1 billion and earnings before tax and depreciation (EBITDA) of €190 million, according to pro-format combined figures for the 12 months period ended December 2007.

The new company will be positioned as the market leader in Spain, France, Portugal and The Netherlands; also maintaining an important presence in Romania, Germany, United Kingdom, Italy and Belgium.

Therefore the merger involves the integration of two very complimentary companies, speaking in terms of geographic presence, know-how and products. From the beginning the new group will create synergies which will be achieved progressively up to €40M at 2012. From then on, synergies will be recurrent.

"We are very proud with the fact that the merger with Groupe Smithfield has generated the support of the majority of the shareholders of Campofrío. It is a solid operation with a strong strategic significance. It will generate value for all stakeholders of the company," confirmed Pedro Ballvé, President of Campofrío.

"Today we have taken a definite step towards the creation of a new European leader in the processed meats sector. By expressing their support, both Campofrío's and Groupe Smithfield's shareholders have demonstrated their confidence in this operation, that will generate value for all our shareholder, business partners, customers and consumers" pointed out the President and CEO of Groupe Smithfield, Robert Sharpe II.

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