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NEW YORK - Leading pork producer Smithfield Foods Inc. has sent a letter to Farmland Industries Inc., offering to buy the company's beef and pork operations, people close to the situation told The Wall Street Journal.
The letter follows an earlier attempt this month by Smithfield to acquire Farmland's successful beef-and-pork business. In the first attempt, the company didn't name a price or time frame. This second attempt puts pressure on Farmland -- the nation's largest farmer-owned cooperative -- to strike a deal to stave off bankruptcy, according to the Wall Street Journal.
People close to the situation told the newspaper that Smithfield has offered to "move quickly" and to make a $10 million debt payment that Farmland is scheduled to pay today as part of a $500 million credit facility.
The Smithfield letter was sent to Farmland's Chief Executive Robert Terry from Richard J.M. Poulson, Smithfield's executive vice president and general counsel. While the letter didn't disclose a price, people familiar with the situation say Smithfield is prepared to pay about five to six times the earnings before interest, taxes, depreciation and amortization for Farmland's meat business, which was about $200 million last year, according to the Wall Street Journal.
In the May 16 letter, Smithfield made a cash offer for Farmland's meat business but didn't disclose a price or time frame. Farmland rejected the offer, saying its meat business wasn't for sale.
A Farmland spokeswoman said the cooperative's CEO hasn't seen any offer and reiterated that the meat business isn't for sale.