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More Value in Chopping Up Smithfield: Activist

Selling Smithfield Foods in parts could bring more value to shareholders than the $4.7 billion takeover of the entire Virginia-based company by a Chinese meat producer, Jeffrey Smith, CEO of activist hedge fund Starboard Value, told CNBC on Monday.

"We identified—and had conversations with some, and we believe there are many others—that are interested in pieces of the company for what would add up to more value than the whole," Smith said in a "Squawk Box" interview.

Starboard, which had a large position in Smithfield before the May 29 acquisition announcement, has bought a lot more shares since, he said. The additional purchases have brought Starboard's total ownership to 5.7 percent—making it one of Smithfield's largest investors.

In a letter to the board, Starboard wrote: "We believe the proposed merger still significantly understates a conservative sum-of-the-parts valuation of the company, which we estimate to be worth between … $44 to $55 per share, representing an approximate 29 percent to 62 percent premium to the $34 per share Shuanghui deal."

(Read More: Smithfield Deal May Face State Hurdles)

"There are interested parties for the pieces," Smith said. "If you add those pieces together, even after considering minimal tax leakage, you get the substantially higher value."

Starboard "is not necessarily against" the Shuanghui deal, he added. "We just believe the company didn't necessarily look at the alternative of selling the company in pieces as opposed to selling the whole."

(Read More: Pork Probe: SEC Alleges Insider Trading on Smithfield)

Starboard's call for a breakup echoes an earlier one from Continental Grain, which later dropped its demand after Shuanghui moved in to buy Smithfield. Smithfield is the world's largest hog farmer and pork processor.

By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC. Reuters also contributed to this report.

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