Smithfield Foods has agreed to purchase Farmland Foods for $363.5 million in cash, pending the completion of bidding.

Farmland and other parties appointed in its Chapter 11 bankruptcy case, voted to accept the bid of Smithfield as offering the greatest value.

The bankruptcy auction process remains open until Sept. 15. “If no further bids are received, Smithfield could close the acquisition of Farmland in about 15 days or about Oct. 1,” says Jerry Hostetter, vice president, Investor Relations and Corporate Communications, Smithfield Foods.

Smithfield has agreed to honor all Farmland Foods hog production contracts. There are 234 contract hog producers in Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska and Oklahoma. Farmland buys about 60% of its hogs under producer contracts.

The accord also calls for all Farmland production plants to remain open and operate at current production levels. Farmland operates three slaughter plants killing 7.5 million hogs a year at Crete, NE, Dennison, IA, and Monmouth, IL., and six pork processing facilities.

The agreement also keeps Farmland Foods as a stand-alone business run by its current management team.

“Farmland has a good management team, efficient plants and a great brand name,” Hostetter says. “We will sell more further-processed meat products through them and we each can increase distribution through each others' systems.”

Log on to www.smithfieldfoods.com for more information on the company.