May 30, 2013
China's meat processor Shuanghui acquires Smithfield Foods
Privately-owned Shuanghui International Holdings Limited, the majority shareholder of Henan Shuanghui Investment & Development Co. - China's largest meat processing enterprise and largest publicly-traded meat products company by market capitalisation - will acquire Smithfield Foods, Inc., the world's biggest hog producer.
Smithfield Foods is valued at approximately US$7.1 billion and Shuanghui will assume
Smithfield's net debt. Under the terms of the agreement, Shuanghui will acquire all of the outstanding shares of Smithfield for US$34.00 per share in cash. The purchase price represents a premium of approximately 31% over Smithfield's closing stock price on May 28, 2013, the last trading day prior to Wednesday's (May 29) announcement.
Shuanghui chairman Wan Long says, "The acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui's distribution network. Shuanghui will gain access to high-quality, competitively-priced and safe US products, as well as Smithfield's best practices and operational expertise. We were especially attracted to Smithfield for its strong management team, leading brands and vertically integrated model."
Shuanghui is committed to continuing the long-term growth of Smithfield, and continuing to work with American farmers, producers and suppliers who have been critical to Smithfield's success. It will continue its long-term strategy and vision to become a global leader with strict adherence to the highest standards of quality control and safety compliance. Its agreement to acquire Smithfield is fully aligned with this focus. It will also maintain the excellence in Smithfield's brands and strategic priorities.
Upon closing of the transaction, Smithfield's common stock will cease to be publicly traded. The company will be a wholly-owned independent subsidiary of Shuanghui International Holdings Limited, operating as Smithfield Foods.
C. Larry Pope, president and CEO says, "This transaction provides Smithfield shareholders with significant and immediate cash value for their investment."
Under the agreement, there will be no closures at Smithfield's facilities and locations, and Smithfield's existing management team will remain in place. Shuanghui has pledged to maintain Smithfield's headquarters in Smithfield, Va., and to continue Smithfield's philanthropic support of community initiatives and investments in sustainability.
Pope will continue as president and chief executive officer of Smithfield, and the management teams and workforces of Smithfield's Independent Operating Companies will continue in place after the transaction. Shuanghui will honour the collective bargaining agreements in place with Smithfield's represented employees, as well as existing wage and benefit packages for non-represented employees.
The deal, which is the largest acquisition by a Chinese company of a US target and the biggest Chinese outbound deal in the consumer staples sector, is pending approval from US regulators and Smithfield shareholders.
