In accordance with Butterball's operating agreement, Smithfield's partner may either accept the offer to sell or be required to purchase Smithfield's 49 per cent interest and its related turkey production assets.

The company expects to conclude the buy/sell decision no later than September 2010 and close before the end of the calendar year.

If Smithfield is the buyer, it will be required to settle Butterball's debt obligations totalling approximately $215 million as of 2 May 2010.

Additionally, if Smithfield is the buyer, the company said it anticipates that a significant amount of capital investment and marketing will be necessary to increase Butterball's earnings potential.

Smithfield believes its current liquidity position will be sufficient to finance the deal.

However, the company said it will evaluate capital alternatives at the appropriate time.

"Purchasing the remaining ownership interest in Butterball will afford Smithfield the opportunity to build the Butterball brand unconstrained by the restrictive terms of our current investment agreement and disagreements with our partner in respect to the development of the business," said Smithfield CEO Larry Pope.

"On the other hand, if we are the seller, we will have exited the turkey business at a price that we believe fairly values the operations. Either way, we will be pleased with the outcome," said Mr. Pope.