Smithfield, Premium Standard Farms to Merge

Boards approve agreement that has Smithfield acquiring all outstanding shares.

Smithfield Foods Inc. and Premium Standard Farms Inc., announced Monday their boards of directors have approved a merger agreement. The unanimously approved agreement will allow Smithfield to acquire all outstanding shards of PSF through the merger.

Each PSF share will be converted into a right to receive 0.678 Smithfield shares plus $1.25 in cash. The agreement is valued at $810 million and includes assumption of $117 million in PSF debt.

ContiGroup Companies Inc., which owns 38.8% of PSF stock, has signed a shareholder support agreement committing to vote for the transaction. The deal is expected to close in the first quarter of 2007.

Smithfield says all current PSF hog production contracts will be honored and its facilities will remain open and in operation at least at current production levels. Smithfield also told wire services it remains committed to purchasing a significant number of hogs on the open market.

There are some antitrust concerns about the merger, according to industry analysts.

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