US panel OKs Shuanghui-Smithfield merger deal

File photo taken on June 16, 2013 shows the logo of Smithfield Foods, Inc. at its headquarters in Smithfield, Virginia, theUnited States. Shuanghui International Holdings Ltd. and Smithfield Foods said on Sept. 6, 2013 that they received clearance on their proposed transaction from the Committee on Foreign Investment in the United States. (Xinhua/Zhang Jun)

Shuanghui International Holdings Ltd. and Smithfield Foods announced Friday evening that they have received clearance on their proposed merger from U.S. regulators.

The transaction remains subject to Smithfield shareholders' approval and other customary closing conditions. Smithfield shareholders are scheduled to vote on the deal at a special meeting on September 24, 2013.

Shuanghui and Smithfield expect the transaction to close shortly thereafter.

"This transaction will create a leading global animal protein enterprise," said Shuanghui International CEO Yang Zhijun.

Smithfield is the world's largest pork processor and hog producer, while Shuanghui is China's largest meat processor.

"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," said Yang.

Once completed, the merger deal, agreed in May, would be the biggest Chinese takeover of a U.S. company.

After the two companies consummate the transaction, Smithfield will continue to operate under its existing brand names as a wholly owned subsidiary of Shuanghui International.

Smithfield said the takeover has also received clearance from the Ukrainian government.

AN ENCOURAGING SIGNAL FOR UPCOMING CHINESE CAPITAL

The approval from the Committee on Foreign Investment in the United States, or CFIUS, eased the doubts that the U.S. government might dislike Chinese companies getting a foothold in the U.S. market through acquisition.

The committee blocked at least three transactions related to Chinese investors in the past four years. Telecommunications giant Huawei was forced to drop a bid to buy computer equipment maker 3Com Corp. in 2008 due to opposition from the CFIUS. ( Ralls Corp, backed by Chinese-owned Sany Group, was also blocked from acquiring the wind farms in the Oregon state, which the CFIUS claimed were too close to military facilities.

The CFIUS, chaired by the Secretary of the Treasury, is an inter-agency committee authorized to review foreign takeovers of U.S. businesses in order to determine the effects of such deals on national security.

The Treasury said Friday in a statement that the U.S. government welcomes foreign investment from all countries and in all economic sectors.

In the most recent CFIUS report, which covers calendar year 2011, Chinese companies were involved in 10 deals that triggered a CFIUS review, trailing behind Britain, 25, and France, 14.

But since 2007, CFIUS reviews of deals involving Chinese firms have tripled.