SMITHFIELD, Va., June 30 /PRNewswire-FirstCall/ -- Smithfield Foods, Inc. (NYSE: SFD) announced today that Groupe Smithfield Holdings, S.L., its 50/50 joint venture with funds controlled by Oaktree Capital Management LLC, has agreed to merge with Campofrio Alimentacion, S.A., the largest processed meats company in Spain. Campofrio, a publicly-traded company on the Spanish Stock Exchanges, will issue shares to Smithfield Foods and Oaktree in exchange for all of the membership interests in Groupe Smithfield. Smithfield, which currently owns 24 percent of Campofrio, will own 36 percent of the combined company after the merger.

The merger will form the leading pan-European company in the processed meats sector with sales of more than $3 billion, leading market shares in Spain, France, Belgium and Portugal and a strong presence in The Netherlands, Romania and Russia. The combined company will be headquartered in Madrid, and will continue to operate under the Campofrio name. Campofrio products are distributed in over 40 countries and Groupe Smithfield has a presence in seven major markets in Europe.

The two companies expect to achieve substantial synergy opportunities in sourcing, manufacturing, and capital expenditures and believe that they offer a platform for future growth.

'This is another key milestone in Smithfield's strategy to enhance its processed meats presence globally. The two companies are very complementary and merging them will provide many significant synergy opportunities,' said C. Larry Pope, Smithfield president and chief executive officer. 'There is a clear correlation between an operation's size and profitability in European processed meats and this merger will make the combined Campofrio-Groupe Smithfield a much stronger company,' he said.

Pedro Ballve, chairman of Campofrio, said that Campofrio and Groupe Smithfield were a strategic fit, with a consolidated position as Europe's leading processed meats company.