Smithfield deal passes US security check
Updated: 2013-09-10 07:00
By Michael Barris in New York and Wang Zhuoqiong in Beijing (China Daily)
A US security panel has cleared a plan by Shuanghui International Holdings Ltd to buy US pork giant Smithfield Foods Inc, moving the $4.7 billion deal a step closer to completion.
Shoppers choose Shuanghui's processed meat products at a supermarket in Yichang, Hubei province. Liu Junfeng / for China Daily
The move is expected to boost pork exports to China in the future and raise the brand and technology know-how for China's largest meat producer, industry insiders said.
With approval by the Committee on Foreign Investment in the United States in hand, the proposed takeover - the largest by a Chinese firm of a US company - now goes to Smithfield shareholders for a vote on Sept 24.
In a news release on Friday announcing the committee's decision, Shuanghui and Smithfield said they expect the purchase, which also includes $2.38 billion in assumed debt, to close soon afterward.
The deal, announced in May, was expected to gain the committee's approval, an inter-agency executive branch panel that examines foreign investment for potential national security threats. Both companies - the largest pork producers in their respective countries - argued that the acquisition would not compromise US food safety standards. The goal, they said, would be to export more Smithfield pork to China, not to import Chinese pork into the US.
China has become the world's largest user of the meat as its increasingly prosperous citizens eat more expensive protein. For Smithfield, the deal would extend its global reach as it seeks to boost sales amid declining pork consumption in its home US market.
"This transaction will create a leading global animal protein enterprise," Yang Zhijun, Shuanghui's chief executive, said in the statement. "Shuanghui International and Smithfield have a long and consistent track record of providing customers around the world with high-quality food. We look forward to moving ahead together as one company."