Watchdog clears Smithfield acquisition

The bid by Shuanghui International Holdings Ltd to buy a US pork processor has been cleared by the US government and is waiting for shareholders' approval, Shuanghui International told the Global Times Saturday in a statement.

The Committee on Foreign Investment in the US (CFIUS). which is an executive branch panel that examines foreign investment for potential threats to national security, approved the transaction proposed by Shuanghui International to buy the world's biggest pork processor Smithfield Foods, the statement said.

Smithfield's shareholders will vote on the transaction at a special shareholders' meeting on September 24. Both Shuanghui International and Smithfield expect the transaction to close shortly after the meeting, the statement said.

Hedge fund Starboard Value LP, which holds a 5.7 percent stake in Smithfield, said it would not approve the merger and would seek for other buyers for Smithfield, Reuters reported Friday.

Smithfield will continue to use its brands after the transaction is completed, according to the statement.

For Shuanghui International, the acquisition of Smithfield is a key step in its globalization process, Yan Qiang, a partner of Beijing-based Hejun Consulting, told the Global Times Sunday, expecting that globalization in the food industry will help to solve China's food safety problems.

"Shuanghui International can benefit a lot from the purchase," Yan said, such as boosting awareness of Shuanghui, bringing in advanced technology and management experience from Smithfield, and enriching its product portfolio.

The huge Chinese market offers growth opportunities for both domestic and foreign meat processing enterprises, Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Co, told the Global Times Sunday, and the expansion of Shuanghui International is intended to meet the needs of the market.

"Together we will be able to meet the growing demand in China for pork by importing high-quality meat products from the US," Wan Long, chairman of Shuanghui International, said in an announcement released on its website on May 29.

After the transaction, Smithfield's common stock will no longer be publicly traded and it will be a wholly owned independent subsidiary of Shuanghui International, Smithfield announced on its website on May 29.

According to the agreement terms, Smithfield shareholders will receive $34 for each share of Smithfield common stock, representing a premium of about 31 percent. The total price values the deal at $7.1 billion, the announcement said.

If the $7.1 billion deal succeeds, it will be the largest Chinese takeover of a US company, the Xinhua News Agency reported Saturday.

Shuanghui International is a Hong Kong-based privately held company, which is the majority shareholder of China's largest meat processor, Shuanghui Investment & Development Co.

Smithfield is a $13 billion global food company and also the world's largest pork processor and hog producer.