Smithfield Foods Investors Approve Sale to Chinese Company for $4.72 Billion

On September 24, Smithfield Foods, Inc. announced that the company’s shareholders voted to approve the sale of the company to the Chinese company Shuanghui International Holdings Limited.

Smithfield shareholders held a special meeting September 24 for the vote.  Shareholders were largely in favor of the sale with 96% of votes cast for the transaction.  These votes account for approximately 76% of Smithfield’s total outstanding shares of common stock as of the date of the vote.

Smithfield Foods is currently publicly traded on the New York Stock Exchange.  Under the terms of the agreement, Smithfield shareholders will receive $34 per share in cash for each share of common stock held, and the company will cease to be publicly traded and be a wholly-owned subsidiary of Shuanghui International Holdings Limited, operating as Smithfield Foods.  The combination is expected to be completed by September 26, 2013.

For more information, see the Smithfield Foods official press release.  Visit Smithfield Food’s website and Shuanghui International Holdings Limited’s website for more information on the companies involved.

See our September 9, July 26, and July 11 blog posts for more background on the transaction.

Written by Alyssa Looney – Research Assistant

The Agricultural Law Resource and Reference Center

@PSUAgLawCenter

September 25, 2013

CFIUS Issues Clearance for Smithfield Foods Merger with Shuanghui

On September 6, 2013, the Committee on Foreign Investment in the United States (CFIUS) granted approval of the purchase of Smithfield Foods by Shuanghui International. Smithfield expects the purchase, which is still conditional on Smithfield shareholder approval and customary closing conditions, to close shortly after the shareholder vote on September 24, 2013. Under the purchase, Smithfield shareholders will receive $34.00 per share in cash. According to Smithfield’s press release, Smithfield and Shuanghui are looking forward to moving ahead as one company. However, in a statement released by the Senate Agriculture, Nutrition, and Forestry Committee, Chairwoman Stabenow states that it is unknown what factors were used by CFIUS in making its decision to allow the merger, and that it is “troubling that taxpayers have received no assurances that… critical issues have been taken into account in transferring control of one of America’s largest food producers to a Chinese competitor with a spotty record on food safety.”

CFIUS’s main purpose is to examine foreign mergers for potential threats to national security. Its reasoning for allowing or prohibiting a foreign purchase remains confidential.

Please see our previous blog post for more information. For an overview of the CFIUS investigation process generally, please visit its website.

 

Written by Sarah Doyle - Research Assistant

The Agricultural Law Resource and Reference Center

@PSUAgLawCenter

September 9, 2013

Investigation of Potential Smithfield Purchase Extended

On July 24, 2013, Smithfield Foods, Inc., announced that the Committee of Foreign Investment in the United States (CFIUS) has notified the parties involved that it will conduct a second phase of investigation lasting 45 days in accordance with the Exon-Florio legislation. The Exon-Florio legislation allows CFIUS to review proposed foreign acquisitions of U.S. companies for potential national security concerns. The legislation provides for an initial 30 day review with an option to extend the process for a period not exceeding 45 days. The CFIUS process is confidential.

Smithfield and Chinese food processing company Shuanghui expect the deal to close in the second half of 2013.

For more information on the potential Smithfield purchase, please see our previous blog post.

Written by Sarah Doyle - Research Assistant

The Agricultural Law Resource and Reference Center

@PSUAgLawCenter

July 26, 2013

U.S. Senate Agriculture Committee Holds Hearing Concerning the Potential Purchase of Smithfield

On July 10, 2013, experts on U.S.-China trade relations, food safety, global business, and foreign acquisitions, as well as the CEO of Smithfield Foods, testified in a hearing held by the Senate Agriculture Committee about the $7.1 billion potential purchase of Smithfield Foods by Shuanghui, a Chinese meat processing company. The hearing examined how the government review process of foreign acquisitions of U.S. companies addresses American food safety, protection of American technologies and intellectual property, and the effects of increased foreign ownership of the U.S. food supply.

CEO of Smithfield, Larry Pope, and the Honorable Matthew Slaughter, professor and Faculty Director of the Center for Global Business and Government at Dartmouth’s Tuck School of Business, supported the acquisition, noting that the U.S. has much to gain through the increased exports of American pork. Dr. Usha Haley, professor and director of the Robbins Center for Global Business and Strategy, West Virginia University, and Mr. Daniel Slane, Commissioner of the US-China Economic and Security Review Commission, U.S. Chamber of Commerce, voiced concerns about how the precedent of a purchase of this magnitude and kind would affect future acquisitions by China of U.S. companies, particularly in the agricultural sector.

After testimony, the Senate Ag Committee Chair, Debbie Stabenow, along with other committee members, questioned the experts as to the potential benefits and concerns over the purchase of a U.S. food company by a Chinese firm.

At least one commentator has opined that the hearing was an effort to put pressure the Committee on Foreign Investment in the U.S.

For Senator Stabenow’s opening statement and the prepared testimony of the witnesses, please visit the U.S. Senate Committee on Agriculture, Nutrition and Forestry’s website.

Written by Sarah Doyle - Research Assistant
The Agricultural Law Resource and Reference Center
@PSUAgLawCenter
July 11, 2013