Slaughterhouse Scouting Is Shaking Up Food Processing Stocks

Smithfield Foods is reportedly scouting for U.S. and European beef and poultry assets to purchase to bring Smithfield in line with its competition.

The move will diversify the world’s largest pork producer’s assets, as the food company makes a move to enter chicken and beef industries. “We're a food company. No one said that we're strictly a pork company," Smithfield CEO Ken Sullivan told Reuters.

The move is driven by Sullivan’s mission to have Smithfield run the entire process production and not have to rely on third parties. Currently, third parties provide Smithfield with beef and chicken to make several of its products. "For us, the next step to develop our business is to consider other sources of animal protein," Luis Chein, WH Group's director of investor relations, said to Reuters.

While no deal is imminent, the WH Group, which bought Smithfield in 2013, still has money to spend. According to its annual report, the WH Group has $1.14 billion in cash and $2.72 billion in unutilized banking facilities. Chein specifically highlighted the group would like to purchase slaughterhouses and other processing plants.

Sympathy Moves

The news sent other food companies moving during Thursday’s trading session. Here are the notable price actions:

• Tyson Foods, Inc. TSN: Up 0.96 percent
• Pilgrim's Pride Corporation PPC: Up 2.06 percent
• Sanderson Farms, Inc. SAFM: Up 3.51 percent
• Hormel Foods Corp HRL: Down 1.8 percent

This news was first reported on the Benzinga News Wire.