Smithfield Buyer Premium Standard Farms

NEW YORK - Sep 18/06 - SNS -- Smithfield Foods, Inc. will buy all outstanding shares of Premium Standard Farms, Inc.

Under the terms of the merger, each PSF share will be converted into the right to receive 0.678 Smithfield shares plus $1.25 in cash. The total combined value of stock and cash is $21.35, based on Smithfield's average closing price on the New York Stock Exchange over the most recent 10-day trading period.

The share exchange portion will be tax-free to PSF shareholders. The agreement has a total transaction value of approximately $810 million, including the assumption of PSF's approximately $117 million of net debt.

Smithfield and PSF stated that ContiGroup Companies, Inc. which owns 38.8% of PSF's stock, has signed a shareholder support agreement committing to vote its PSF shares in favor of the transaction. The transaction is expected to close in the first calendar quarter of 2007.

PSF has approximately 32.0 million shares outstanding. Smithfield will issue approximately 21.9 million shares in exchange for PSF shares. Smithfield stated that it expects the transaction to be accretive to its earnings per share following closing.

Smithfield said all current PSF hog production contracts will be honored, giving PSF's independent hog producers the certainty and security of contractual supply relationships; and Smithfield will remain committed to purchasing significant numbers of hogs on the open market; and PSF's facilities will remain open and in operation at least at current production levels, continuing to serve their customers.

For the twelve months period ended at the June 24, 2006 close of PSF's fiscal first quarter, PSF had net sales of $880 million and net income of $45.3 million.