COFCO Ltd, China's largest agricultural trading and processing company, has agreed to buy 4.95 percent of leading United States pork producer Smithfield Foods Inc.

The US firm will sell 7 million shares, or 4.95 percent of its common stock, to COFCO at a price to be decided later, the Virginia-based company said in a statement. Based on Smithfield's Monday close of US$19.88, the stake would be valued at US$139 million.

The purchase price will match the closing price of Smithfield's common stock on the date when the firm prices its offering of US$350 million convertible senior notes due 2013, it said.

Beyond the commercial aspects, the deal could also help COFCO learn from Smithfield's expertise and technology in livestock breeding and help the US firm expand in the domestic pork industry.

Zhang Xinyue, a spokeswoman for Beijing-based COFCO, said Smithfield could help in the Chinese company's 1.5-billion-yuan pig breeding program using ecological technologies which started this year in the central Hubei Province.

"COFCO has introduced Smithfield to many opportunities in China and we look forward to continue working together," Larry Pope, Smithfield's president and chief executive officer, said.

The blue ear disease outbreak, high feed prices and the 8.0-magnitude earthquake on May 12 which killed over 3 million pigs in Sichuan Province, the country's top pig breeder, have contributed to soaring pork prices in China and added pressure on inflation.

Domestic pork prices jumped 48 percent in May from a year earlier, prompting more meat imports.

"But the equity investment in Smithfield, our first in a US company, is not directly related to the pork import issue," Zhang Xinyue, a spokeswoman for Beijing-based COFCO, said.