Sept. 7 (Bloomberg) -- Smithfield Foods Inc., the world’s largest hog and pork producer, said U.S. regulators will allow the company to be bought by China’s Shuanghui International Holdings Ltd. in what would be the biggest Chinese purchase of a U.S. firm.
“This transaction will create a leading global animal protein enterprise,” Zhijun Yang, Chief Executive Officer of Shuanghui International, said in a joint statement from both companies released yesterday.
The Committee on Foreign Investment in the U.S., or CFIUS, approved the transaction and it will be voted on by Smithfield shareholders at the company’s annual meeting Sept. 24. The government of Ukraine also approved the deal, according to the statement.
Shuanghui, based in Hong Kong, said May 29 it would buy Smithfield for $4.72 billion in a deal that has drawn scrutiny from senior members of Congress in both U.S. political parties, including Senate Finance Committee Chairman Max Baucus, a Democrat from Montana, and Orrin Hatch, a Republican from Utah, who had asked for a “thorough review” of the plan.
CFIUS blocked at least three transactions in the past four years that would have resulted in Chinese companies gaining control of assets near military facilities. Huawei Technologies Co. and Bain Capital Partners LLC also dropped a bid to buy computer equipment maker 3Com Corp. in 2008 in the face of opposition from CFIUS.
The committee, led by the Treasury Department, is made up of representatives from the Justice, Homeland Security and Defense departments and five other agencies, any of which might have particular concerns about a takeover by a given foreign buyer. Elizabeth Bourassa, a spokeswoman for the Treasury Department, declined to comment.
Starboard Value LP, an activist investor, has advocated a breakup of Smithfield and said Sept. 4 it received interest from third parties that may want to buy the individual assets of the world’s largest pork supplier.
Another shareholder Continental Grain Co., also pushed for a breakup of the Smithfield, Virginia-based company before saying in June it was satisfied with the Shuanghui bid and selling its stake.
CFIUS may have considered whether Smithfield’s facilities are near military bases and other sensitive locations, Stephen Mahinka, an attorney with Morgan Lewis & Bockius LLP, said in May. The panel also may have looked at Smithfield’s part in feeding into the U.S. food-supply chain, said Farhad Jalinous, a lawyer at Kaye Scholer LLP in Washington.
To contact the reporter on this story: Shruti Date Singh in Chicago at email@example.com
To contact the editor responsible for this story: Simon Casey at firstname.lastname@example.org