Smithfield seeks full control of Butterball

Butterball could have a new parent before Thanksgiving.

The turkey company, which moved its corporate headquarters to Garner in 2008, is a joint venture of Maxwell Farms of Goldsboro and Smithfield Foods, the world's largest pork producer.

But Smithfield Foods, which owns 49 percent ofButterball, isn't happy with the arrangement.

On Thursday, the company announced that it has offered about $200 million to buy Maxwell's 51 percent stake.

If Maxwell isn't interested in selling, Smithfield plans to unload its share of Butterball.

Smithfield Foods wants a decision by mid-September. Any change could affectButterball's work force, which includes 78 people at its Garner headquarters and about 2,500 at a huge plant in Mount Olive and another plant in Kinston.

The joint venture structure and "disagreements with our partner" are holding back Butterball's potential, said Smithfield Foods CEO C. Larry Pope in a conference call with Wall Street analysts.

"We strongly believe we need full control of Butterball in order to improve its performance, or we need to exit and redeploy these resources in other, more profitable" opportunities, he added. "We want in or out. We believe this is a tremendous household brand that has not been adequately supported."

Maxwell doesn't want to walk away from Butterball, President Walter Pelletier said. "We believe in the long-term business outlook of Butterball, and we are currently pursuing several opportunities that will allow us to proceed with our desire to be the buyer of Butterball," he said in a prepared statement.

He declined further comment Friday. Maxwell is a division of Goldsboro Milling Co.

Caught in the middle of the parental squabble, Butterball CEO Keith Shoemaker also declined to discuss the situation Friday. In a prepared statement, he noted: "This transaction is between ownership, and we cannot comment at this time."

Butterball's headquarters move two years ago was a big boost for Garner's Greenfield North, a business park near the intersection of Interstate 40 and U.S. 70 that had struggled to attract big tenants.

Butterball is perhaps best known for its whole turkeys and its telephone help line, which assists thousands of cooks each year at Thanksgiving. The company also produces sandwich meat and other turkey products, and has contracts with hundreds of poultry farmers.

Virginia-based Smithfield Foods is one of the largest employers in Eastern North Carolina. Its work force includes more than 5,000 employees at the world's largest pork-processing plant in Tar Heel, about 80 miles south of Raleigh. The company also has contracts with hundreds of pig farmers in this state.

Smithfield Foods has been hit by weaker demand for its products during the recession, as well as higher grain prices. The company reported Thursday that it lost $101.4 million during its latest fiscal year, which ended in May. Company officials said that improving results at Butterball will allow them to focus more resources on increasing pork profits.

"We will not accept the returns from a commodity business in the way in which it is run today," Pope told analysts. "This is too valuable an asset."