Shuanghui International Purchases Smithfield Foods

Most recent updates regarding Smithfield Foods purchasing agreement
SMITHFIELD, Va., Sept. 24, 2013 (GLOBE NEWSWIRE) -- Smithfield Foods, Inc. (NYSE:SFD) announced today that the shareholders of the company voted overwhelmingly to approve the proposed strategic combination with Shuanghui International Holdings Limited.

At a Special Meeting of Smithfield shareholders held today, more than 96% of the votes cast were voted in favor of the transaction, which represents approximately 76% of Smithfield's total outstanding shares of common stock as of the record date for the Special Meeting.

"We are pleased with the outcome of today's vote and thank all of our shareholders for their support," said C. Larry Pope, president and chief executive officer of Smithfield. "This is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture. The partnership is all about growth, and about doing more business at home and abroad. It will remain business as usual — only better — at Smithfield, and we look forward to embarking on this new chapter."

Under the terms of the agreement Smithfield shareholders will receive $34.00 per share in cash for each share of Smithfield common stock that they own.

Upon closing of the transaction, Smithfield's common stock will cease to be publicly traded and the company will be a wholly-owned subsidiary of Shuanghui International Holdings Limited, operating as Smithfield Foods. Subject to customary closing conditions, the company expects to complete the combination by September 26, 2013.


At least one shareholder says Smithfield Foods could be worth more than the $4.7 billion being offered by China’s Shuanghui company. An investment fund called Starboard Value LP which owns 5.7 percent of Smithfield says the hog producer/processor would get a lot more if it were split-up into three parts and sold separately.

 

Starboard Chief Executive Jeffrey Smith is sending a 16-page letter to Smithfield board members saying if broken up into pork production, pork processing and international business, the three entities would appeal to more buyers and could garner a collective $44 to $55 per share compared to the $34 per share being offered by Shuanghui.

Last March, Continental Grain, at the time another big Smithfield shareholder had called for a break-up. Continental sold most of its Smithfield stock when the Shuanghui deal was announced


Shuanghui International, a central China-based meat processing company, is purchasing Smithfield Foods for $4.7 billion. If you remember a few months back in March, it was revealed that Smithfield Foods, Inc., the largest hog producer and processor in the United States, was looking into possibly breaking off operations. It was also reported that Goldman Sachs Group Inc., gave potential options of splitting into three separate companies to create more specialized divisions (read more)

Now, Smithfield has a new home in central China by the country's largest meat processing company.

 Shuanhui will purchase all outstanding shares of Smithfield for $34 per share, which represents a premium over 30% of Smithfield's closing stock price on May 28, 2013.  

Read below for the full press release via Smithfield Foods' website:


Shuanghui International and Smithfield Foods Agree to Strategic Combination, Creating a Leading Global Pork Enterprise

Smithfield Shareholders to Receive US$34.00 Per Share in Cash, Which Values Smithfield at US$7.1 Billion

Combined Company to Have Greater Access to Large and Growing Chinese Market and Retain World-Leading Food Safety and Quality Control Standards

Shuanghui Commits to Maintain Smithfield Operations, Staff and Management

Ongoing Commitment to Best Practices, Customer Service and Community Involvement

SMITHFIELD, Va. and HONG KONG, May 29, 2013 (GLOBE NEWSWIRE) -- Smithfield Foods, Inc. (NYSE:SFD) and Shuanghui International Holdings Limited today announced that they have entered into a definitive merger agreement that values Smithfield at approximately US$7.1 billion, including the assumption of Smithfield's net debt. Shuanghui International is the majority shareholder of Henan Shuanghui Investment & Development Co. (SZSE:000895), which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalization.

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, 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 today's announcement.

"This is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture," said C. Larry Pope, president and chief executive officer of Smithfield. "We have established Smithfield as the world's leading and most trusted vertically integrated pork processor and hog producer, and are excited that Shuanghui recognizes our best-in-class operations, our outstanding food safety practices and our 46,000 hard-working and dedicated employees. It will be business as usual — only better — at Smithfield. We do not anticipate any changes in how we do business operationally in the United States and throughout the world. We will become part of an enterprise that shares our belief in global opportunities and our commitment to the highest standards of product safety and quality. With our shared expertise and leadership, we look forward to accelerating a global expansion strategy as part of Shuanghui."

"We are pleased to have reached this agreement with Smithfield, which represents a historic opportunity for both companies and their stakeholders," said Shuanghui chairman Wan Long. "Shuanghui is a leading pork producer in China and a pioneer in the Chinese meat processing industry with over 30 years of history. Smithfield is a leader in our industry and together we will be able to meet the growing demand in China for pork by importing high-quality meat products from the United States, while continuing to serve markets in the United States and around the world. The combination creates a company with an unmatched set of assets, products and geographic reach."

Mr. Wan continued: "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 U.S. 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. We look forward to working with Larry Pope and the many talented employees at Smithfield to grow the combined company as a leading global pork and processed meat producer with the same vision and values of providing high-quality and safe products to consumers."

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. Shuanghui 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.

Shuanghui will maintain the excellence in Smithfield's brands and strategic priorities. Together, Shuanghui and Smithfield will enhance their competitiveness, contributing to a more secure future for the Chinese and U.S. pork industries.

Mr. Pope added, "This transaction provides Smithfield shareholders with significant and immediate cash value for their investment, and ensures that Smithfield will continue to execute on its strategic priorities while maintaining our brand excellence, community involvement, and our commitment to environmental stewardship and animal welfare. Our board of directors is pleased with the outcome of the process we followed leading to this transaction, and we unanimously believe that this combination with Shuanghui is in the best interests of the Company, our shareholders and all Smithfield stakeholders."

Commitment to Smithfield's Headquarters, Management and Employees

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. Mr. 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 honor the collective bargaining agreements in place with Smithfield's represented employees, as well as existing wage and benefit packages for non-represented employees. Under the agreement, there will be no closures at Smithfield's facilities and locations, and Smithfield's existing management team will remain in place.

Understanding the importance of preserving Smithfield's heritage, values and connections with the communities it serves, and because it also is an engaged member of the communities it serves, 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.

Transaction Details and Approvals

The transaction will be financed through a combination of cash provided by Shuanghui, rollover of existing Smithfield debt, as well as debt financing that has been committed by Morgan Stanley Senior Funding, Inc. and a syndicate of banks. There is no financing condition to this transaction.

The closing of the transaction is subject to certain conditions, including, among others, approval by Smithfield's shareholders, the receipt of approval under applicable U.S. and specified foreign antitrust and anti-competition laws, The Committee on Foreign Investment in the United States and other customary closing conditions.

The transaction is expected to close in the second half of 2013. Find more at www.smithfieldfoods.com

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