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Subject:
        Smithfield/Murphy deal stumbles to conclusion
   Date:
        Sun, 30 Jan 2000 15:15:18 -0800
   From:
        [log in to unmask]

Update:   the Smithfield/Murphy deal was finalized on Friday, except for
the MO
& IA operations, which is a big chunk of sows and finishers.......

Feedstuffs Magazine, January 31, 2000
Iowa challenges sale of Murphy Farms
By STEVE MARBERY
Feedstuffs Correspondent

Acquisition of Murphy Farms Inc. by Smithfield Foods Inc. of Virginia
hit
another roadblock last week when Iowa Attorney General Tom Miller filed
suit
Jan. 24 in Humboldt County district court.

The court granted a temporary injunction pursuant to a preliminary
injunction
hearing scheduled for Feb. 10 in Dakota City, Iowa. Miller is requesting
a
permanent injunction to block Smithfield's acquisition of Murphy's Iowa
assets.

The largest integrated U.S. pork packer, Smithfield agreed to purchase
Murphy's
assets Sept. 2 in a transaction originally set for completion by late
January.
Headquartered in Rose Hill, N.C., Murphy operates a large contract
finishing
network in Iowa in addition to its North Carolina, Oklahoma and Missouri

production facilities. The second-largest producer in the U.S., Murphy
maintains
approximately 325,000 sows in midwestern operations that are supplied by
feed
mills in Algona, Iowa, and Nevada, Mo.

"We believe the acquisition would violate Iowa's corporate farming law,
which
prohibits pork or beef processors from owning, controlling or operating
feedlots
in Iowa," Miller said.

Reporting $3.8 million in earnings for its last fiscal year, Smithfield
owns
pork plants in Sioux City, Iowa; Sioux Falls, S.D.; Gwaltney and
Smithfield,
Va.; Tar Heel, N.C.; Canada, Mexico and Europe and production units in
North
Carolina, Virginia, South Carolina, Utah, Brazil and Mexico. The
acquisition
would give Smithfield control of approximately 300 Iowa production
sites,
according to Miller.

Contracts provide Murphy authority over most management, marketing,
nutrition,
medication and transportation decisions, among other factors, according
to
Miller. He said the acquisition would double Smithfield's production
capacity
and boost its captive supply to 60%. Smithfield was notified in
September of
Iowa's concern that the acquisition would violate the state's corporate
farming
law.

A similar legal challenge two years ago prompted Carrolls' Foods of
Warsaw,
N.C., to divest and restructure ownership of northern Iowa facilities
including
at least three 2,400-sow units, plus associated nurseries and finishers.
In that
case, Carrolls' held a small percentage of Smithfield Foods. S.J. Faison
Jr.,
Carrolls' president, subsequently acquired the Iowa facilities under a
separate
corporation. Carrolls' was purchased by Smithfield last year.

Earlier in January, Missouri Attorney General Jay Nixon filed suit in
Nevada,
Mo., alleging Smithfield's proposed acquisition of Murphy Farms would
violate
that state's corporate farming law (Feedstuffs, Jan. 10). The case was
moved to
Cole County Circuit Court, Jefferson City, where a judge on Jan. 21
ordered
Smithfield to divest Murphy's Missouri holdings within 10 days of the
formal
transaction. Smithfield did not challenge the court order, according to
Nixon.
The company owns land and facilities involving 16 farms and
approximately 60,000
sows in southwestern Missouri. Many of the Missouri pigs are finished in
Iowa.

Copyright 2000, The Miller Publishing Company, a company of Rural Press
Ltd.

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