Starboard Says It Can’t Build Alternative Smithfield Bid

Starboard Value LP, the activist investor that has advocated a breakup of Smithfield Foods Inc., said it is unable to offer an alternative to the pork producer’s $4.7 billion agreement to be bought by China’s Shuanghui International Holdings Ltd.

“In light of the restrictions imposed by the merger agreement between the issuer and Shuanghui, and the requirement of structuring a cash bid from a single entity, it proved challenging for the bidder group to formalize and deliver an alternative proposal prior to the special meeting,” Starboard said today in a filing.

Investors are scheduled to vote Sept. 24 on Hong Kong-based Shuanghui’s $34-a-share proposed acquisition of Smithfield, the world’s largest hog and pork producer. Starboard reiterated today that it had got non-binding written indications of interest from parties, which it didn’t identify, for all of Smithfield’s assets and the total was above the $34 per share offer from Shuanghui.

Starboard said today unless another proposal emerges, it plans to vote in favor of Smithfield’s deal with Shuanghui. The investor had tried to compel Smithfield to delay the meeting because, under the terms of the Shuanghui merger agreement, the board can’t consider alternative bids after the Chinese deal is approved by shareholders.

May Agreement

Shuanghui agreed in May to buy the Smithfield, Virginia-based meat processor in what would be the largest Chinese purchase of a U.S. company. Smithfield and Shuanghui said on Sept. 6 the deal received clearance from the Committee on Foreign Investment in the U.S.

Former shareholder Continental Grain Co. had asked Smithfield to consider breaking up before the agreement with Shuanghui was announced. Continental said in June it was satisfied with Shuanghui’s bid and sold its stake in the pork processor.

Smithfield said in a July filing that its board evaluated breaking up the company and concluded that it wasn’t “in the best interests” of the company or its shareholders.

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