UPDATE: Bank of America Downgrades Smithfield Foods Following Buyout

In a report published on Wednesday, Bank of America analyst Ryan Oksenhendler downgraded Smithfield Foods SFD from Neutral to No Rating.

In the report, Bank of America stated that, "Smithfield Foods announced this morning that the company will be acquired by Shuanghui International for $34/share, or a total value of $7.1bn which includes the assumption of $2.2bn of debt. The transaction price represents a 31% premium to yesterday's closing price, and implies a 7.0x EBITDA multiple on a normalized basis and 8.6x our F14 estimate, above SFD's historical trading range of 5.0-7.0x. The takeout price of $34/share is a discount to the $40/share presented by Continental Grain Co. (SFD's 2nd largest shareholder) in a presentation to the Board of Directors on April 25th, based on a break up of the company. The deal is expected to close in the second half of 2013 and is subject to a shareholder vote, US and foreign antitrust approvals and Committee on Foreign Investment in the US (CFIUS)."

Smithfield Foods closed Tuesday at $25.97.