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.

With approval by the Committee on Foreign Investment in the United States, or CFIUS, 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 Friday announcing CFIUS' 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 CFIUS 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 consumer 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, and we look forward to moving ahead together as one company."

Smithfield CEO and President 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."

Some analysts have said the deal, if approved, could pave the way for more transactions tied to an ambitious new effort by Beijing to obtain raw materials and technology needed to run its fast-growing economy. China's rapid growth into the world's second-largest economy has been accompanied by problems in food security and safety, as well as environmental pollution and health care.

CFIUS' decision - disclosed after Smithfield announced a 36 percent drop in fiscal first quarter profit amid weakness in key export markets - prompted US Senator Debbie Stabenow, a Michigan Democrat who chairs the Senate Committee on Agriculture, to express concern about the US food-safety implications if the deal wins shareholder approval.

In a statement, Stabenow said it was not clear "what factors the committee took into account in making its decision". Stabenow, whose Senate panel held a hearing in July to review the impact that purchases of US food companies by foreign groups have on the country, said: "We still do not know if the potential impact on American food security, the transfer of taxpayer-funded innovation to a foreign competitor, or China's protectionist trade barriers were considered."

"It's troubling that taxpayers have received no assurances that these critical issues have been taken into account in transferring control of one of America's largest food producers to a Chinese competitor with a spotty record on food safety," the senator's statement said.

In April 2011, Shuanghui apologized and promised to revamp its safety regimen after a Chinese television investigation tied it to sales of pork produced with clenbuterol, a food additive banned in the United States, the European Union and China because of health risks.

China's latest five-year plan has identified food security and safety among the challenges the nation must overcome, in the wake of a tainted-milk scare and the discovery of dead pigs in Shanghai's rivers. The government also has announced a plan to revamp food safety legislation first passed in 2009 to modernize standards by 2015.

The deal is expected to pass muster with Smithfield shareholders, despite a major stakeholder's opposition. Activist hedge fund Starboard Value LP, which holds a 5.7 percent interest in Smithfield, has vowed to vote against the merger in an effort to buy time to find a more lucrative deal for shareholders.

The hedge fund has said it has held talks with potential rival suitors who would pay "substantially" more than Shuanghui's cash bid. Starboard has argued that the company would get a better offer for Smithfield if it were broken into three parts - US pork production, hog farming and international sales of fresh and packaged meats - and then sold.

michaelbarris@chinadailyusa.com

(China Daily USA 09/09/2013 page1)