Smithfield Foods is raising $522 million through its initial public offering on the Nasdaq Global Select Market. The price was lower than the nation’s leading pork producer had expected.
The company’s stock began trading on the market January 28 under the ticker symbol “SFD.” Smithfield's offering of nearly 26.1 million shares of common stock was priced at $20 per share, according to a release, or about 25% lower than company estimates from a week ago.
As part of the offering, about half of the stock total — 13 million shares — is from Smithfield and the other half is from its former parent company WH Group. There are expected to be 393 million shares outstanding after the IPO, bringing Smithfield’s market capitalization to $7.86 billion.
The final figure is less than Smithfield’s anticipated $11 billion estimate a week ago, but more than the $5.38 billion estimate WH Group shared with investors in November.
In a previous investor filing, Smithfield planned to sell 34.8 million shares valued between $23 and $27 per share. That would have raised as much as $939.6 million for the pork producer.
Despite the muted IPO, Alex Frederick, an emerging technology analyst at Pitchbook, called the move a “significant milestone in the food industry,” saying it provides Smithfield with enhanced financial flexibility and access to capital markets as it looks to expand and invest in new opportunities.
“This IPO positions Smithfield to lead innovation in the pork sector and strengthen its competitive edge in the U.S. and international markets,” Frederick said in a statement.
WH Group, which acquired Smithfield in 2013, decided to spin off its U.S. and Mexico operations after several quarters of income declines and market pressures. Though the companies will technically be separate, WH Group will retain control over Smithfield after the dust settles.
Smithfield said WH Group will own about 93% of its shares after the IPO, making it a “controlled company” with strong decision-making and voting influence from its former parent company.
Long Wan, the chairman of Smithfield’s board of directors and chairman of WH Group, agreed to purchase 3.2 million shares as part of the IPO.
Additionally, the underwriters have a 30-day window to purchase up to 3.9 million extra shares at the initial offering price. The offering is set to close on Jan. 29.
