Chinese meat processor to purchase Smithfield

Published May 29, 2013 by Jessica Sabbath

Shuanghui International Holdings Ltd. has reached an agreement to purchase pork producer and packaged meat company Smithfield Foods for about $4.7 billion.

Under the plan, which is subject to approval by Smithfield shareholders and other closing conditions, Smithfield shareholders will receive $34 per share. The purchase price is a 31 percent premium over the May 28 closing price of Smithfield’s stock.

Shuanghui Internatinal is the majority shareholder of Henan Shuanghui Investment & Development Co., China’s largest meat processing company.

The deal is designed to allow Smithfield to enter the Chinese market by offering its products through Shuanghui’s distribution network.

“Shuanghui is a leading pork producer in China and a pioneer in the Chinese meat processing industry with over 30 years of history,” Shuanghui Chairman Wan Long said in a statement. “Shuanghui is a leading pork producer in China and a pioneer in the Chinese meat processing industry with over 30 years of history. Smithfield is a leader in our industry and together we will be able to meet the growing demand in China for pork by importing high-quality meat products from the United States, while continuing to serve markets in the United States and around the world. The combination creates a company with an unmatched set of assets, products and geographic reach.”

Smithfield Foods will operate as a wholly owned subsidiary of Shuanghui International, and Smithfield’s management and work force will stay in place. C. Larry Pope will remain president and CEO. There will be no closure of Smithfield’s facilities.

The transaction will be financed through cash from Shuanghui, the rollover of existing Smithfield debt and debt financing from Morgan Stanley Senior Funding Inc.

The deal is expected to close in the second half of 2013.

Shunaghui has committed to keeping Smithfield Foods’ headquarters in Smithfield and continuing its community and philanthropic efforts, according to a company statement.