RICHMOND, Va. - Shuanghui International Holdings Ltd. has agreed to buy Smithfield Foods Inc. for approximately $4.72 billion, the largest acquisition of a U.S. company by a Chinese company.
Hong Kong-based Shuanghui owns a variety of global businesses that include food, logistics and flavoring products and is the majority shareholder in China's largest meat processing enterprise. Smithfield, the world's biggest pork producer, owns brands such as Armour, Farmland and its namesake.
Shareholders of Smithfield will receive $34 per share under terms of the deal announced Wednesday -- a 31 percent premium to the Smithfield, Va., company's closing stock price of $25.97 on Tuesday. The stock closed up $7.38 or 28.42 percent to $33.35 Wednesday.
Both companies' boards have unanimously approved the transaction, which still needs approval from Smithfield's shareholders. The deal may also be subject to review by the U.S. Committee on Foreign Investment, which evaluates the potential national security effects of transactions.
Chinese investment in the U.S. is still comparatively low but has risen sharply in recent years. China has accused the U.S. of discriminating against its companies, although analysts say American firms face bigger obstructions investing in China.
Shuanghui has 13 facilities that produce more than 2.7 million tons of meat per year. Under the agreement, there will be no closures at Smithfield's facilities, including its Smithfield, Va., headquarters in the historic southeastern Virginia town of about 8,100 where it was founded in 1936, the companies said.
Smithfield's management team will remain in place and Shuanghui will honor the collective bargaining agreements with Smithfield workers. The company has about 46,000 employees.
"This transaction preserves the same old Smithfield, only with more opportunities and new markets and new frontiers," Smithfield CEO Larry Pope said. "This is not a strategy to import Chinese pork into the United States . . . this is exporting America to the world."