Pork firm Smithfield sold to China’s Shuanghui for $7.1 billion
Smithfield Foods Inc., the world’s leading pork producer, is being sold to Shuanghui International Holdings, owner of China’s largest meat processing business, for $7.1 billion.
Smithfield shareholders, who along with antitrust regulators must still approve the deal, would get $34 per share in cash, a 31% premium over the closing stock price on Tuesday.
With 138.8 million outstanding shares, the value of the takeover, sans debt, is $4.7 billion.
Hong Kong-based Shuanghui is a majority shareholder of mega-meat company Henan Shuanghui Investment & Development Co., which produces more than 2.7 million tons of meat a year.
By becoming a subsidiary of Shuanghui, Smithfield is expected to expand its presence in the booming Chinese market while maintaining its food safety standards, the company said.
The $13-billion U.S. company will be allowed to keep its headquarters in Smithfield, Va., none of its facilities will close and its 46,000 employees will keep their jobs. Collective bargaining agreements will stay in place. Smithfield will keep its name but stop trading publicly.
“We do not anticipate any changes in how we do business operationally in the United States and throughout the world,” C. Larry Pope, who will retain his post as Smithfield’s chief executive, said in a statement.
The deal, which was unanimously approved by both companies’ boards, is expected to close in the second half of the year.
“This is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture,” Pope said.
Wenonah Hauter, executive director of consumer advocacy group Food & Water Watch, said in a statement that the Smithfield-Shuanghui marriage creates a “cross-border bacon behemoth.”
She said the deal will lead to “farmer exploitation, more factory farms and a more complicated supply chain that leaves consumers at higher risk of food contamination.”
“This merger tightens the grip of multinational agribusinesses and Wall Street on America’s kitchens,” she said, pointing to investment bank Goldman Sachs’ role as a key Shuanghui investor.