(Recasts, adds details)
CHICAGO(Reuters) - Pork producer Smithfield FoodsInc said Friday it will sell its 49 percent stakein turkey producer Butterball LLC to its joint venture partnerfor about $175 million.
Smithfield and Maxwell Farms LLC have jointly owned theButterball brand since 2006. The sale should be completed bythe end of the year and Smithfield will use the proceeds to paydown debt.
Maxwell Farms will then sell half of Butterball toagriculture company Seaboard Corp . Late on Thursday,Seaboard said it had reached a deal to buy 50 percent ofButterball in partnership with Maxwell Farms.
"We are pleased to be partnering with Seaboard and movingforward as the buyer of Butterball, the strongest brand in theturkey industry," Walter Pelletier, president of Maxwell Farms,said in Thursday's statement.
Earlier this week Smithfield Foods had said it would likelysell its 49 percent stake in the joint venture. Smithfield hadunsuccessfully tried to buy the remaining 51 percent for about$200 million.
"As previously stated, our minority ownership position inButterball did not permit us to execute the growth strategythat we believe was necessary to fully develop the company toits potential. Accordingly, we are exiting the business, andwill use the sale proceeds to further delever our balancesheet," Smithfield CEO C. Larry Pope said in Friday'sstatement.
"While largely expected, we believe that the sale of theButterball turkey business would be a positive catalyst forSmithfield shares. Turkey is a noncore business forSmithfield," Stephens Inc analyst Farha Aslam said in a noteprior to Smithfield's announcement.
In morning trade, Smithfield shares were off 1.9 percent to$16.61 and Seaboard shares were up 1.3 percent to $1680.00. (Reporting by Bob Burgdorfer, editing by Gerald E. McCormick)