Smithfield Foods Inc. has been bought out by Chinese company Shuanghui International Holdings Ltd. for about $4.72 billion, the Associated Press reported Wednesday.
This merger is the heftiest acquisition a Chinese corporation has made from an American company to date, and will make Smithfield the largest private ham producer.
Shuanghui, a company based out of Hong Kong, already claims ownership of a number of businesses worldwide, including food and spicing production corporations. Shuanghui also holds the majority of shares in China's food processing enterprise, replete with 13 facilities making upwards of 2.7 million tons of meat a year.
Smithfield has a few additional brands under its ownership belt, including Armour and Farmland.
Following the deal's terms, Smithfield shareholders will obtain $34 per share. This translates to a 31 percent premium to the Smithfield, Va. Corporations' final stock price tag of $25.97.
The merger topped out at about $7.1 billion-that figure includes Smithfield's debts, which have accumulated to around $138.8 million in outstanding shares.
The deal also specifies that Smithfield will not close any of its facilities or locations, including its main office in Smithfield, Va. where the company was founded in 1936. The corporation will keep its preexisting management in place, and has requested Shanghui recognize union agreements with Smithfield's staff of about 46,000.
Smithfield CEO Larry Pope told AP that this merger will keep Smithfield the way it always was, but certainly adds a wealth of opportunities for new markets.
"This is not a strategy to import Chinese pork into the United States," Pope said in a conference call with the Associated Press. "This is exporting American to the world."
He went on to say that this isn't a chance for China to further monopolize American markets, either.
"People have this belief...that everything in America is made in China," he said. "Open your refrigerator door, look inside. Nothing in there is made in China because American agriculture is the most competitive and efficient in the world. This is the one place America can absolutely compete."
Zhijun Yang, managing director of Shuanghui, also told investors that this was a favorable circumstance.
"Together, we can be a global leader in animal protein," Yang said, according to AP. "No other combination has such a great opportunity."
