(Reuters) - Smithfield Foods, the world's biggest pork processor, said on Monday it will sell 150,000 female pigs to Murphy Family Ventures.
The deal will further reduce the number of hogs owned by Smithfield as it prepares for a U.S. listing.
Murphy will become one of the largest independent pork producers in the U.S., with the capacity to produce approximately 3.2 million hogs annually for Smithfield's fresh pork operation, Smithfield said in a statement.
Murphy will assume ownership of 150,000 sows — and the market hogs they produce — that are currently owned by Smithfield, while Smithfield will provide production, feed and transportation services, the statement said.
"Smithfield has evolved over the last 10 years into a more streamlined consumer packaged goods company," President and Chief Executive Officer Shane Smith said.
"With this agreement, we continue this transformation while ensuring a supply of hogs from a family farming operation."
The transaction is expected to close by the end of the year, Smithfield said.
Smithfield's owner, Hong Kong-based WH Group (OTC:WHGLY), is seeking shareholder approval for the proposed spin-off of Smithfield and plans to list the business in the U.S. Last year, Smithfield said it would end contracts with 26 farms in Utah, permanently close 35 farm sites in Missouri and close a plant in North Carolina. Pork producers lost money last year as pig prices and consumer demand struggled at a time of high costs for labor and other expenses, leading them to cut down supply. This also led to Smithfield reducing hog production and reducing farm operations in Missouri, Utah, Arizona, California and the East Coast. The Virginia-based firm also announced the separation of its European operations.