Bookmark and Share

Chinese Meat Producer Shuanghui to Acquire Smithfield Foods (SFD)

Shares of Smithfield Foods Inc. (NYSE: SFD) skyrocketed on Wednesday after Chinese food processing company Shuanghui International also referred to as Shineway, said that it will acquire the world’s biggest pork producer in deal estimated at about $4.7 billion. The acquisition is by far the biggest ever done by a Chinese Company in the U.S.

According to the deal, Shuanghui, which is the biggest pork producing company in China, will pay $34 a share, representing a premium of 31% over the closing stock price on Tuesday.

The deal would also allow Smithfield to gain access in China, which is one of the world’s biggest consumers of pork. In order to counter slowing sales in other international markets, Smithfield was looking at ways to export its meat products in China.

Shuanghui, which is located in central China with factories spread across the mainland, is partly owned by an investment firm, owned by Goldman Sachs and is a parent company of Henan Shuanghui Investment & Development Company, listed on the Shenzen Stock Exchange since late 1990s. The Company also has presence in Japan and Korea.

The Chinese Company was under fire in 2011 when it was found that few of its farms fed the cattle containing certain chemical deposits which are considered hazardous for humans.

The deal is expected to close by the second half of this year, provided it gets approval from the Committee on Foreign Investment in the United States and Smithfield shareholders.

Commenting over the deal, Smithfield’s CEO, Larry Pope said in a statement, “This transaction preserves the same old Smithfield, only with more opportunities and new markets and new frontiers …This is not a strategy to import Chinese pork into the United States … this is exporting America to the world.”

While Smithfield was advised by Barclays and law firms McGuire Woods and Simpson Thacher & Barlett, Shuanghui received legal advice by law firms Paul Hastings, Troutman Sanders and investment bank, Morgan Stanley.


Leave a Reply




You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

All stories in are for informational purposes only. This is NOT a stock recommendation. This story is a daily light analysis featuring a stock with insider buying. With some caveats, insiders purchase a stock because they think the stock is going up. There are other factors to consider such as size of the transaction relative to their compensation and net worth. Sometimes, insiders might be propping a stock price up for future financing. Sometimes, the amount of insider buying are misread or misreported. Each month, DailyStocks releases a a summary of the stocks with insider buying. Sign up for the free monthly newsletter at . About is the place where you can find stories about stocks with insider buying, where you can educate yourself about stock market investing, and where you can perform the stock search engine analysis – you enter a stock symbol, and you get a resulting page of stock ticker indexed links so that you do not have to type the stock symbol each time.