US committee clears Chinese firm's US$4.7b acquisition of Smithfield Foods
Smithfield Foods won national security clearance for its proposed US$4.7 billion sale to a Chinese meat processor, overcoming one of the biggest obstacles to a takeover.
The approval by an important government committee came despite the scepticism of lawmakers, who professed concern over a Chinese company owning Smithfield, America's biggest pork producer.
Analysts, however, are expecting Smithfield and its suitor, Shuanghui International, to prevail. The Committee on Foreign Investment in the United States, commonly known as Cfius, has historically reviewed acquisitions involving key industries like energy and technology. But it has little precedent in examining them in the food sector.
Both firms argued that their combination poses no danger of compromising US food safety standards. Indeed, they contend that the goal is to export more Smithfield pork to China, satisfying rising demand for high-quality meat in that country.
"This transaction will create a leading global animal protein enterprise," Zhijun Yang, Shuanghui's chief executive, said. "Shuanghui International and Smithfield have a long and consistent track record of providing customers around the world with high-quality food, and we look forward to moving ahead together as one company."
But the takeover, the largest of a US company by a Chinese counterpart, was almost certain to attract scrutiny.
Sceptics have repeatedly raised concerns about the possibility of compromised food safety standards. Members of the Senate Agriculture Committee held a hearing this summer reviewing whether foreign takeovers of US food producers were in the country's best interests.
Senator Debbie Stabenow, chairwoman of the committee, said: "It remains unclear what factors the committee took into account in making its decision. We still do not know if the potential impact on American food security … It's troubling that taxpayers have received no assurances that these 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."