Smithfield Foods to Sell to Chinese Conglomerate
Early Wednesday morning Smithfield Foods announced they’d completed a definitive merger agreement with a large Chinese conglomerate Shuanghui International Holdings Limited. The agreement values Smithfield at approximately $7.1 billion dollars including the assumption of Smithfield’s net debt. Shuanghui International is the majority shareholder of Henan Shuanghui Investment & Development Co. , which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalization.
While headquartered in Smithfield, Virginia, most hogs in North Carolina are owned by Smithfield one way or another. Assistant Director of International Trade for the North Carolina Department of Agriculture, Peter Thornton said this was big news:
“The largest potential market for NC pork is China. In the past there have been issues with trade restrictions of pork going into China, assumedly now those restrictions will probably be lifted and we can see a lot more exports in to China.
The standards set by USDA here are probably some of the highest in the world. I have to imagine the Chinese want the standards that we set.
China imported about $50 million worth of pork, which is about 1/5 of what Japan imported, and I think those will rise. Their population is gaining income and they will want better food, their meat of choice is pork.”
Smithfield will become a private company. Current leadership and management will remain in place. The headquarters will remain in Smithfield, Va.
There will be no Smithfield plant closings as a result of the transaction, Smithfield President and CEO C. Larry Pope said. He also confirmed that he will remain in his current role. 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. The transaction is expected to close in the second half of 2013.