Chinese company to buy Smithfield Foods
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SMITHFIELD, Va., May 29, 2013 - Smithfield Foods, the largest U.S. pork producer, and Shuanghui International today announced the Chinese meat processing enterprise offered to buy Smithfield Foods and acquire the company's debt.
According to the announcement, the companies entered into a definitive merger agreement that values Smithfield at approximately $7.1 billion. Under the terms of the agreement, Shuanghui will acquire all of the outstanding shares of Smithfield for $34.00 per share in cash.
The transaction is expected to close in the second half of 2013.
The Committee on Foreign Investment in the United States (CFIUS), an inter-agency committee authorized to review transactions that could result in control of a U.S. business by a foreign person, first must approve the merger.
Shuanghui International is the majority shareholder of Henan Shuanghui Investment & Development Co., which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalization.
“This is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture,” said C. Larry Pope, president and chief executive officer of Smithfield, a vertically integrated pork processor and hog producer with 46,000 employees.
“We do not anticipate any changes in how we do business operationally in the United States and throughout the world,” Pope continued. “We will become part of an enterprise that shares our belief in global opportunities and our commitment to the highest standards of product safety and quality.”
Shuanghui chairman Wan Long said the acquisition will allow his company to sell more high-quality pork to China's growing middle class.
“The acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui's distribution network,” Long said. “Shuanghui will gain access to high-quality, competitively-priced and safe U.S. products, as well as Smithfield's best practices and operational expertise.”
According to Smithfield's announcement, the company will be a wholly-owned independent subsidiary of Shuanghui International Holdings Limited. Current employees will be maintained, as well as Pope as president and CEO of Smithfield.
Shuanghui will honor the collective bargaining agreements in place with Smithfield's represented employees, as well as existing wage and benefit packages for non-represented employees. Under the agreement, there will be no closures at Smithfield's facilities and locations, and Smithfield's existing management team will remain in place, noted the announcement.
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