By Niket Nishant and Arasu Kannagi Basil
(Reuters) – Smithfield Foods was valued at $7.7 billion after its shares fell 3.2% on Tuesday, in a muted debut that might prompt other IPO candidates to tread cautiously.
The lukewarm reception to the largest U.S. pork processor’s public offering, following closely on the heels of Venture Global’s underwhelming debut last week, underscores investors’ cautious approach to new listings.
Despite the surge of optimism sparked by President Donald Trump’s pledges for pro-business policies and corporate tax reductions, concerns about unpredictable interest rates and inflation have tempered overall economic confidence.
Even tried-and-tested companies such as Smithfield, which was founded in 1936 and is profitable, may have to temper their valuation expectations, analysts have said.
“For companies planning IPOs this year, this may be a wake-up call to align their expectations with the new, more selective investment climate,” said Aakarsh Rattan Ramchandani, chief analyst and strategy officer at financial insights platform Bigdata.com.
Smithfield, with a workforce of 34,000 in the U.S. and 2,500 in Mexico, had warned of tariff risks and immigration-related workforce disruptions in its IPO prospectus.
These concerns have become more pressing with President Trump’s recent threats of universal tariffs and the beginning of a sweeping immigration crackdown when he took office earlier this month.
Export sales accounted for 13% of Smithfield’s total sales for the nine months ended Sept. 29.
Its stock was last trading at $19.36, compared with the IPO price of $20, below the $23-$27 range it had forecast earlier.
“Investors in their IPO will likely need to price in additional risks related to trade tensions, potential tariffs and immigration risks,” Ramchandani said.
Smithfield had initially targeted proceeds of up to $940 million but downsized the IPO and settled for $521.7 million, to be divided between it and its parent company WH Group, which was also selling some shares.
“We have an extremely strong balance sheet. We wanted our share price to be in a position to trade really well over the course of the coming future,” CEO Shane Smith told Reuters.
“We believe that the heavy lifting is done,” he said, adding the company would now focus on optimizing and growing the business.
Smithfield became the largest fresh pork processor in the U.S. via a series of acquisitions in the 1980s.
It was listed on the New York Stock Exchange from 1999 until 2013, when it was acquired by Hong Kong-based WH Group for $4.7 billion in what was the biggest Chinese takeover of a U.S. firm at the time.
