Starboard said a broken-up Smithfield could be worth $44 to $55 per share, compared with the $34-per-share price offered by Shuanghui International Holdings in what would be the China's largest purchase to date of a U.S. company.
In a letter to the Smithfield board, delivered by Monday, Starboard Value said it has taken a 5.7 percent stake in Smithfield and that the firm would be worth more if it were broken up into three divisions and then sold.
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"Just to be clear, our letter isn't meant to get the company to stop the transaction in and of itself and we're not necessarily against the transaction," Jeffrey Smith, CEO and CIO of Starboard, told CNBC Monday. "We just believe that the company didn't necessarily look at the alternatives of selling the company in pieces as opposed to selling the whole."
The proposed divisions are U.S. pork production, hog farming and international sales of fresh and packaged meats.
Starboard's call for a break-up echoes an earlier one from Continental Grain, which later dropped its demand after Shuanghui International Holdings moved in to buy the world's largest hog farmer and pork processor.
Starboard's 5.7 percent stake would catapult it past Vanguard Group, which was the largest investor in Smithfield with 4.6 percent stake as of March 31, according to Thomson Reuters data.
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