By calling it a “great transaction” for shareholders, farmers and agriculture in the United States, Smithfield Foods chief executive Larry Pope couldn’t have been more ebullient now his shareholders have rubber-stamped Shuanghui’s takeover of the American company.
"The partnership is all about growth, and about doing more business at home and abroad," Pope said had said of of the US$4.7bn deal. Those with stock in the world’s biggest pork processor clearly believed him, and following a vote, more than 96% of returns backed the transaction.
Business as usual
“It’s business as usual—only better" at Smithfield, said Pope on hearing the news.
Once the Virginia-based company’s acquisition is formally closed, its shares, which are listed on the New York Stock Exchange, will cease trading and Smithfield will then start operating as a wholly owned unit of the Chinese company.
Shuanghui, which in turn is China’s biggest meat processor, will pay Smithfield shareholders US$34 in cash for each share held—up 31% in price since the deal was announced in May.
Faced with widespread objections in America, with some critics pointing at the continued push by China’s businesses into the country, both Smithfield and Shuanghui have taken time to assert how transaction was driven by growing pork demand in China, and not a strategy to export pork to the US.
The merger failed to raise antitrust concerns because it doesn't give Smithfield—already the world's largest hog farmer and pork producer—a larger share of the US pork market.
Two weeks ago, the Committee on Foreign Investment in the United States, an inter-agency committee of the US government that reviews foreign purchases for national-security implications, approved the transaction at the end of an extended 45-day investigation, clearing the way for the shareholder vote.
Smithfield and Shuanghui have said the acquisition won't result in major changes to Smithfield's management or workforce. Smithfield has more than 46,000 employees.
With annual revenue of $13 billion, it has facilities in 26 US states, including the world's largest slaughterhouse and meat-processing plant, in North Carolina. It also has operations in Mexico and 10 European countries.
The acquisition is China's largest cross-border deal since CNOOC Ltd paid US$15.1bn last year for Canadian oil and gas producer Nexen.