Sun, Sep 08, 2013 - Page 13 News List

Smithfield sale to China meat processor approved

AFP, WASHINGTON

The takeover of US pork giant Smithfield Foods by China’s Shuang-

hui International Holdings (雙匯國際) has received approval from a key US national security review, the two companies announced Friday.

The high-level Committee on Foreign Investment in the US (CFIUS) has approved the US$7.1 billion deal, which would put the Chinese company in control of the world’s largest swine grower and pork processor, they said.

The committee, which operates under the US Treasury, investigates any major foreign purchase of a US business that could be seen as damaging national security.

The clearance was an important hurdle to pass before the takeover goes ahead.

Yet the deal still faces a shareholder challenge. Earlier this week a key investor, Starboard Value, called on other shareholders to oppose the deal, arguing that the company would be worth more if broken up and sold piece-by-piece.

The two companies announced the deal on May 29, with Shuang-

hui — which controls one of China’s largest meat processors — offering US$4.5 billion in cash for the US company, whose name has long been closely identified with US pork products.

Adding the debt Shuanghui will take on, the deal’s overall value increases to US$7.1 billion.

Some politicians expressed concerns about the takeover of the company, given China’s huge demand for pork imports and rising prices in the US market, and concerns of adequate sanitary standards.

Shuanghui has insisted it will keep the company’s US operations and brands, and would uphold safety standards.

“This transaction will create a leading global animal protein enterprise,” Shuanghui chief executive Zhijun Yang (楊志軍) said on Friday. “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.”

Sept. 24 has been set for a special Smithfield shareholders meeting to ratify the deal.

Yet earlier this week, Starboard, which holds 5.7 percent of the company, said it would vote in opposition, and urged others to do so as well. The firm is worth between US$9 billion and US$10.8 billion if broken up, and it had identified potential buyers of various units, Starboard said.

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