Smithfield Shareholders Approve Takeover Bid by Shuanghui

Smithfield Foods Inc. (SFD) shareholders voted to approve Shuanghui International Holdings Ltd.’s $4.7 billion deal, the largest Chinese acquisition of a U.S. company.

The $34-a-share offer for the world’s biggest producer of hogs and pork was approved by 96 percent of voting shareholders, Chief Executive Officer C. Larry Pope said at a special meeting in Richmond, Virginia, yesterday. Hong Kong-based Shuanghui agreed to buy the meat processor in May. An alternative plan from an activist shareholder to split the company into three parts was abandoned before the vote.

“China needs our product bad, and we need to sell it,” Maynard Gwaltney, a shareholder in the Smithfield, Virginia-based company, said after the meeting. “It’s a good merger for both parties for the future and it’s the way to go.”

The purchase drew criticism from some lawmakers who raised concerns that it may help transfer food-safety issues from China to the U.S. The bid for Smithfield underscores the increased demand for meat, particularly pork, from China’s expanding middle class.

The acquisition price is fair and the deal may mean growth in the U.S. with new plants and more hog farms to meet China’s demand, Gwaltney said.

The deal received clearance from the Committee on Foreign Investment in the U.S., the companies said Sept. 6. Proxy advisory firms Glass Lewis & Co. and Institutional Shareholder Services both recommended voting for the deal this month.

Starboard Split

Starboard Value LP, the activist investor that has advocated a breakup of Smithfield since June, was unable to offer an alternative to Shuanghui’s offer, according to a Sept. 20 filing. In the absence of another bid, Starboard planned to vote in favor of Shuanghui’s offer.

Smithfield faced demands to increase returns for investors in March from shareholder Continental Grain Co. as rising animal-feed costs made hog production unprofitable. Continental said in April a breakup into three businesses would achieve a stock price of $40 within three years. Continental subsequently backed the bid from Shuanghui and sold its holding.

Smithfield was unchanged at $33.98 at at the close in New York yesterday. The shares have gained 31 percent since Shuanghui’s bid was announced.

“This is an opportunity for us to move the company forward,” Pope said at the meeting.

To contact the reporters on this story: Brian Wingfield in Richmond at bwingfield3@bloomberg.net; Shruti Date Singh in Chicago at ssingh28@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net; Jon Morgan at jmorgan97@bloomberg.net

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