The activist investor, now Smithfield's (>> Smithfield Foods, Inc.) biggest shareholder with a 5.7 percent stake, said Smithfield might be worth "well in excess" of the $34 per share offered by Shuanghui (>> Shuanghua Holdings Ltd) if it split into hog production, pork and international units and shopped the businesses separately.

Smithfield shares rose 0.9 percent to $33.09, well below the sum-of-the-parts valuation of $44 to $55 per share that Starboard laid out in a letter to Smithfield's board, dated June 17.

The ho-hum market reaction on Monday could be a sign that investors think a breakup is unlikely.

"Continental Grain has made this case for several years and has not gotten anywhere with it," said Moody's analyst Brian Weddington, referring to the agricultural company that had pushed for a split-up. Continental sold its Smithfield shares after the Shuanghui deal was announced.

Continental was not immediately available to comment.

The planned purchase by Shuanghui would be the largest by a Chinese company of a U.S. firm to date. (http://link.reuters.com/heq88t)

The deal has some U.S. lawmakers worried about food safety implications for consumers. Senate Agriculture Committee Chairwoman Debbie Stabenow, Democrat of Michigan, has said that federal agencies considering the merger "must take China's and Shuanghui's troubling track record on food safety into account."

The companies insist the transaction was focused on exporting U.S. pork to China, not importing meat from China.

LOTS OF INTEREST

Starboard said it believes there are numerous interested parties for each of the company's divisions and that it "is looking to identify and engage in discussions with any third parties who may be interested in acquiring any of Smithfield's operating units."

It did not identify any possible bidders.

Thailand's Charoen Pokphand Foods Pcl (>> Charoen Pokphand Foods Public Co. Ltd.), controlled by billionaire Dhanin Chearavanont, considered bidding for Smithfield, it said last month. Other companies in the meat business mentioned by industry observers as possible suitors for parts of Smithfield include Hillshire Brands Co (>> Hillshire Brands Co), Tyson Foods Inc (>> Tyson Foods, Inc.) and Brazil's JBS SA (>> JBS SA). None of the companies has said they were interested.

Run by Jeffrey Smith, New York-based Starboard has run campaigns in recent months at Office Depot Inc (>> Office Depot Inc), DSP Group Inc (>> DSP Group, Inc.) and Tessera Technologies Inc (>> Tessera Technologies, Inc.).

It was influential in Office Depot selling its Mexican business, has received support from other shareholders on its director slate at DSP Group, and succeeded in replacing the board at Tessera. It was less successful at AOL, where it lost a proxy fight last year.

Its stake in Smithfield catapults it past Vanguard Group Inc, which owned 4.7 percent as of March 31, according to Thomson Reuters data.

A spokesman for Shuanghui declined to comment on the Starboard letter. Smithfield was not immediately available.

(Reporting by Sakthi Prasad and Siddarth Cavale in Bangalore and Martinne Geller in New York; Editing by Edwina Gibbs, Lisa Von Ahn and Jeffrey Benkoe)

By Martinne Geller