Shuanghui Intl's Smithfield purchase may raise US hackles
The mainland's largest meat processing enterprise, Shuanghui International, is paying US$4.7 billion in cash to buy the American firm Smithfield Foods, the world's largest pork producer.
China’s Shuanghui International plans to buy Smithfield Foods Inc for US$4.7 billion (HK$36.5 billion) to feed a growing Chinese appetite for US pork, but the proposed takeover of the world’s No. 1 producer has stirred concern in the United States.
The transaction, announced on Wednesday, would rank as the largest Chinese takeover of a US company, with an enterprise value of US$7.1 billion (HK$55.1 billion), including debt assumption.
As it stands. the deal is the biggest Chinese play for a US company since CNOOC offered to buy Unocal for about US$18 billion (HK$139.7 billion) in 2005. The state-controlled energy company later withdrew that bid under US political pressure.
Like similar foreign transactions, the Smithfield deal will face the scrutiny of the Committee on Foreign Investment in the United States, or CFIUS, a government panel that assesses national security risks.
And at least one member of Congress said the deal raised alarms about food safety, noting Shuanghui was forced to recall tainted pork in the past.
“I have deep doubts about whether this merger best serves American consumers and urge federal regulators to put their concerns first,” US Representative Rose DeLauro, a Democrat from Connecticut, said in a statement.
Shuanghui is already majority shareholder of Henan Shuanghui Investment & Development, China’s largest meat processor. It would join forces with a company that has a worldwide herd of 1.09 million sows, according to industry data compiled by Successful Farming magazine.