Shuanghui International’s $4.7bn deal for Smithfield Foods approved in US

Shuanghui International’s proposed acquisition of US-based pork producer and processor Smithfield Foods for $4.7bn has been approved by the Committee on Foreign Investment in the United States (CFIUS).

The CFIUS’ approval paves the way for what is reportedly the largest ever takeover of a US company by a Chinese firm.

Both the companies have also been given clearance by the Ukrainian Government to merge; however, Smithfield Foods’ shareholders are set to vote on the deal at a special meeting due on 24 September.

Following shareholder approval, the transaction could take immediate effect.

The deal had faced opposition from US lawmakers, and was reviewed by a committee of several government agencies overseen by the Treasury Department, over food safety and domestic pork supply concerns.

Shuanghui and Smithfield officials stated that the merger will not pose any risk of compromising American food safety standards and the intention was to export more Smithfield pork to China to cater to the increasing demand.

However, the deal would still face opposition from activist investor Starboard Value, which holds a 5.7% stake in Smithfield Foods.

Starboard Value, which is in search of an alternative buyer for the company, stated that it had received interest from certain third parties, which would pay more than Shuanghui’s offer of $34 per share.

Since there is no confirmed competing bid, Smithfield shareholders are likely to favour the Chinese deal.

Shuanghui International CEO Zhijun Yang said that the transaction will create a leading global animal protein enterprise.

"Shuanghui International and Smithfield have a long and consistent track record of providing customers around the world with high-quality food, and we look forward to moving ahead together as one company," Yang added.

Smithfield president and CEO C. Larry Pope said, "We are pleased that this transaction has been cleared by CFIUS, and we thank the committee for its careful attention to this review."

In May, Shuanghui International entered into a definitive merger agreement to acquire Smithfield for $7.1bn in cash, including the assumption of net debt.

Following the completion of the deal, Smithfield Foods’ common stock will cease to be publicly traded and the company will operate as a wholly-owned independent subsidiary of Shuanghui International.

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Image: The deal will allow Smithfield Foods to export more pork to China. Photo courtesy of antpkr.