China’s Shuanghui Takes Smithfield Private for $4.7B

by Marc Bastow | May 29, 2013 10:46 am

China’s Shuanghui Takes Smithfield Private for $4.7B

Hong Kong-based Shuanghui International Holdings, announced it will take U.S. based Smithfield Foods (SFD[1]) private in a $4.72 billion ($34 per share) buyout.

The move, which will require shareholder approval and may be reviewed by the U.S. Committee on Foreign Investment, will place Smithfields Armour and Farmland brands under Shuanghui, China’s largest meat processing company. Shuanghui’s meat processing operations process over 2.7 million tons of meat per year. In addition to its meat processing business, Shuanghui owns interests in logistics and flavoring products.

The total transaction is valued at over $7 billion including the assumption of Smithfield debt, and once the transaction is closed Smithfield stock will no longer be traded on the NYSE.

The purchase agreement keeps Smithfield’s facilities, including its headquarters in Smithfield, Virginia, open, and the current management team, including CEO Larry Pope, will remain. Additionally, Smithfield’s 46,000 employees will still be covered under the collective bargaining agreements in place.

During a morning conference call Pope said “this transactions preserves the same old Smithfield, only with more opportunities and new markets and new frontiers. This is not a strategy to import Chinese pork into the United States, this is exporting America to the world.”

Initial reaction to the announcement shows investors are enthusiastic and optimistic about the purchase, with SFD shares trading up 25% to over $32, and up nearly 40% from Tuesday’s close.

Written by Marc Bastow, Assistant Editor at InvestorPlace.com. As of this writing he does not hold a position in any of the aforementioned securities.

 

Endnotes:
  1. SFD: http://studio-5.financialcontent.com/investplace/quote?Symbol=SFD

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