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SMITHFIELD, Va. -- Smithfield Foods, Inc. said Tuesday it has agreed to acquire the pork manufacturing and processing assets of bankrupt Farmland Industries, Inc. for $363.5 million in cash.
Farmland Industries, based in Kansas City, Mo., is a farmer-owned cooperative. Its pork business had sales of $1.8 billion last year.
Smithfield said last month that it was interested in bidding for Farmland Foods. It expects the acquisition to add immediately to earnings.
Farmland said the agreement is subject to bankruptcy court approval and will be the basis for an auction process involving other parties interested in the pork assets. Such a process could result in a higher purchase price, Farmland said.
Under terms of the deal, Smithfield would continue to operate all Farmland plants at current production levels. In addition, the company would retain Farmland's 6,100 employees, including its management team, honor contracts with unions and hog producers, and assume Farmland's pension plan.
The definitive agreement has the support of Farmland's official committee of unsecured creditors and its official committee of bondholders.
Pending approvals, the companies expect the sale to close within 75 days, unless a higher offer is received.
With the agreement to sell its pork assets, Farmland has either completed or agreed to sell substantially all its assets. It filed for Chapter 11 bankruptcy protection in May 2002.
Shares of Smithfield were at $23.45 early Tuesday afternoon, up 85 cents, or 3.8 percent, on the New York Stock Exchange.