Shuanghui International Holdings Ltd. has agreed to buy Smithfield Foods Inc. for approximately $4.72 billion, the largest acquisition of a U.S. company by a Chinese company, according to reports released Wednesday.
Smithfield Foods, the world's biggest pork producer, owns brands such as Armour, Farmland and its namesake. Shareholders of Smithfield will receive $34 per share under terms of the deal announced Wednesday - a 31 percent premium to the Smithfield, Va., company's closing stock price of $25.97 on Tuesday, the Associated Press noted.
Both companies' boards have unanimously approved the transaction, which still needs approval from Smithfield's shareholders. The deal is subject to review by the U.S. Committee on Foreign Investment in the United States, or CFIUS, a government panel that reviews transactions that would bring U.S. businesses under foreign control, Smithfield said in a statement. The process typically includes a 30-day initial review, followed by a 45-day investigation before making a recommendation to the president.
"This transaction preserves the same old Smithfield, only with more opportunities and new markets and new frontiers," Smithfield CEO Larry Pope said in a conference call, according to Reuters. "This is not a strategy to import Chinese pork into the United States ... this is exporting America to the world."
"People have this belief ... that everything in America is made in China. Open your refrigerator door, look inside. Nothing in there is made in China because American agriculture is the most competitive and efficient in the world. This is the one place America can absolutely compete," he said.
The transaction would be the largest Chinese takeover of a U.S. company, with an enterprise value of $7.1 billion, which includes the assumption of debt. Smithfield Foods has about 138.8 million outstanding shares, according to FactSet. Smithfield's stock will no longer be publicly traded once the deal closes.
