Smithfield swallows Sara Lee’s European meats business

June 27, 2006

Smithfield Foods, Inc., Smithfield, Va., announced June 27 that it has signed a purchase agreement to acquire the European meats business of Sara Lee Corp. for $575 million, plus the assumption of pension-related liabilities in an amount not to exceed $39 million. Smithfield intends to complete and finance the acquisition of Sara Lee’s European meats business on a stand-alone, non-recourse basis through a 50 percent-owned joint venture with Oaktree Capital Management, LLC.

The transaction is subject to customary regulatory and closing conditions and is expected to close by the end of September.

Smithfield intends to contribute its Jean Caby operations to the joint venture with Oaktree. Group Jean Caby had sales of $372 million in fiscal 2006 and is a major producer of branded and private label processed meats to retail and foodservice customers in France and other European countries.

Sara Lee’s European meats business generated $1.1 billion in sales in fiscal 2005 and holds its largest positions in France, Portugal and the Benelux region, with popular European brands such as Aoste, Justin Bridou and Nobre. The company also has a presence in Germany, Italy and the United Kingdom.

“This acquisition is an important step,” said Robert A. Sharpe II, who will be chief executive officer of the new company. Sharpe currently is president, international operations of Smithfield. “Our strategy going forward will be to develop leading companies with strong brands directed by dynamic local management,” he added.

“The Sara Lee business is well positioned with strong brands and broad distribution and is an important player in processed meats in Western Europe,” said C. Larry Pope, president and chief operating officer of Smithfield. "We are pleased to be moving to the next phase with Sara Lee in the acquisition process."

Oaktree Capital Management, LLC is an investment management firm with approximately $30 billion of assets under management in specialized investment strategies. Institutional clients include Fortune 100 U.S. companies, large public pension funds, university endowments, private foundations and high net worth individuals.

Smithfield Foods has delivered a 24 percent average annual compounded rate of return to investors since 1975. With sales of $11 billion, Smithfield is a leading processor and marketer of fresh pork and processed meats in the U.S., as well as the largest producer of hogs. For more information, please visit

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