By MICHAEL BARRIS ( China Daily)
Calling it a "great transaction" for shareholders, United States farmers and agriculture,Smithfield Foods Inc Chief Executive Officer Larry Pope announced that shareholders hadapproved the pork giant's acquisition by Shuanghui International Holdings Ltd, the biggestChinese takeover ever of a US company.
"The partnership is all about growth, and about doing more business at home and abroad,"Pope said Tuesday of the $4.7 billion acquisition, and he promised to keep things "business asusual — only better" at Smithfield.
More than 96 percent of the votes cast backed the transaction, representing about 76 percentof the company's outstanding stock, Smithfield said.
The acquisition, valued at $7.1 billion including debt, is expected to formally close by Thursday,after which the Virginia-based company's New York Stock Exchange-listed shares will cease totrade publicly, it said. The world's largest pork processor will then begin to operate as a whollyowned Shuanghui unit.
The Smithfield acquisition is China's largest cross-border deal since CNOOC Ltd paid $15.1billion last year for Canadian oil and gas producer Nexen Ltd.
Shuanghui, China's biggest meat processor, will pay Smithfield shareholders $34 cash for eachshare held, a 31 percent premium to the price when the deal was announced in May.
Proxy advisory firms Glass Lewis & Co and Institutional Shareholder Services hadrecommended that Smithfield shareholders back the deal.
Unhappy with the offer, New York hedge fund Starboard Value LP, a 5.7 percent Smithfieldstakeholder, had said it would vote against the transaction if it could not find a more lucrativealternative offer.
Starboard reversed course last week and said it would vote for the acquisition after failing tofind a more lucrative alternative bid.
The proposed acquisition sparked debate over the deal's implications for US food safety.
Both companies asserted the merger was driven by growing pork demand in China and not astrategy to export pork to the US. The merger failed to raise antitrust concerns because itdoesn't give Smithfield — already the world's largest hog farmer and pork producer — a largershare of the US pork market.
Two weeks ago, the Committee on Foreign Investment in the United States, an inter-agencycommittee of the US government that reviews foreign purchases for national-securityimplications, approved the transaction at the end of an extended 45-day investigation, clearingthe way for the shareholder vote.
Some analysts predict the Smithfield deal will be a watershed event that will lead to moretransactions tied to an ambitious effort by Beijing to obtain raw materials and technologyneeded to run China's growing economy.
China's robust growth over the past three decades, putting it on course to overtake the US asthe world's largest economy by 2020, has been accompanied by problems with food securityand safety, as well as environmental pollution and healthcare.
Erik Gordon, a law professor at the University of Michigan Law School and Ross School ofBusiness, told China Daily that any unexpected developments tied to the deal in the next fiveyears could affect the outlook for future Chinese acquisitions in the US.
More deals could be in the offing "if Smithfield works out well for the Americans over the nextfive years", Gordon said.
But "if Americans are fired, if Smithfield refuses to disclose information that is customarilydisclosed in the US, or if anything else that is unusual happens, it will increase the fears andsuspicions," Gordon said.
"If China wants to acquire more US companies, it will have to handle Smithfield carefully," hesaid.
Smithfield and Shuanghui have said the acquisition won't result in major changes to Smithfield'smanagement or workforce. Smithfield has more than 46,000 employees.
With annual revenue of $13 billion, it has facilities in 26 US states, including the world's largestslaughterhouse and meat-processing plant, in North Carolina. It also has operations in Mexicoand 10 European countries.