Fitch: Smithfield unchanged

Fitch Ratings said it does not expect to take any immediate rating actions based on Smithfield Foods, Inc's announcement that it is evaluating a joint de-listing takeover bid of Campofrio Food Group, SA with the company's chairman Pedro Ballve.

Smithfield's ownership in Campofrio would increase to 87.6%, up from 37% currently, the agency said. Oaktree Capital Management, LP owns about 24%, Pedro Ballve holds an estimated 13% and the remaining 26% is owned by smaller independent investors.

The probability of a definitive agreement is high even though the timing of any transaction remains uncertain, the agency added. Smithfield desires to increase its exposure to higher margin packaged meats, has significantly improved its capital structure and has a long history with both CFG and Oaktree.

Due to heightened feed costs, particularly for corn, current ratings incorporate expectations that industry margins could experience material contraction and that leverage could increase to the low-3 times range in fiscal 2012, the agency said.

Smith currency has a B+ long-term issuer default rating, BB+/RR1 secured term loan and secured notes and B/RR5 senior unsecured debt. The outlook is stable.

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