US meat heavyweight Smithfield Foods is set to raise less than it anticipated from an IPO as pricing fell short of target.
The initial pricing guidance of $23 to $27 a share would have raised as much as $940m for the pork processor based on a total offering of 34.8 million shares, equally split between the company's common stock and a shareholder subsidiary.
However, in an announcement yesterday (27 January), Smithfield Foods said the IPO was priced at $20 a share, with a total offering of 26,086,958 million, again equally distributed between the two entities. That would equate to a $521.7m raise.
Smithfield Foods, which is owned by China’s WH Group, is seeking a listing after more than a decade as a private company. The IPO is expected to close tomorrow (29 January) following today's debut on the Nasdaq exchange.
The company now plans to offer 13,043,479 shares of common stock, while the same amount will be offered by SFDS UK Holdings, an indirect wholly owned subsidiary of Smithfield’s parent, WH Group.
Speculation has suggested the threat of tariffs on imports into the US could have had an impact on Smithfield’s IPO funding.
President Trump has threatened to introduce a 25% import tariff on imports from Mexico.
Smithfield, which identified tariffs as a risk factor in its IPO prospectus, has operations in Mexico where it employs around 2,500 people.
WH Group had confirmed the spin-off of 20% of Smithfield Foods in November.
Smithfield has been restructuring its business to enhance efficiency.
In August, the company spun off its European operations into a standalone business, aiming “to focus local management teams on the different market dynamics of North America and Europe”.
In December, Smithfield, which owns the brands Smithfield, Eckrich, and Nathan’s Famous, among others, transferred a portion of its hog farming operations to a new venture led by Murphy Family Ventures.
Additionally, recent filings revealed that Smithfield sold its hog production assets in Utah and several farms in Missouri.
The net proceeds from the IPO that will be allocated to Smithfield are intended to be used for general corporate purposes, including investments in infrastructure, automation, and capacity expansion, it has previously said.
Smithfield posted net income of $581m from continuing operations for the nine months ended 29 September, compared to a net loss of $2m during the same period a year earlier.
The company recorded sales of $10.2bn, down from $10.6bn in the previous year.
Smithfield was previously listed on the New York Stock Exchange from 1999 until 2013, when it was acquired by WH Group for $4.7bn and taken private.
