Shuanghui International and Smithfield Foods Agree to Strategic Merger

Smithfield Foods, Inc. and Shuanghui International Holdings Limited 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., which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalisation.

 

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.

 

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.

 

"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. "It will be business as usual at Smithfield. We do not anticipate any changes in how we do business operationally in the United States and throughout the world."

 

Shuanghui chairman Wan Long notes that the acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui's distribution network. Wan adds that 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," notes wan.

 

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. 

 

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.

 

Shuanghui has pledged to maintain Smithfield's headquarters in Smithfield, Va.


 

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