Smithfield and Shuanghui Announce Merger

Smithfield Food Co., Ltd. (Smithfield Foods,Inc.) and Shuanghui International (Shuanghui International Holdings Limited) announced on May 29 that the two companies have signed a final merger agreement to acquire Smithfield's assets worth approximately US $7.1 billion, including the assumption of Smithfield's new debt.

Shuanghui International is the main controlling shareholder of Henan Shuanghui Investment & Development Company, located in Hong Kong, is a company engaged in global business activities, including food, logistics and condiments. According to the market sales capital, Shuanghui is the largest meat processing enterprise in China and the largest meat sales company in China. Founded in 1936, Smithfield Foods has become the world's largest pig and pork producer, operating in 12 countries around the world. The company's previously announced fiscal year 2012 results showed that net profit reached $0.3613 billion, diluted earnings per share of $2.21; sales reached $13.1 billion, an increase of 7%. In fiscal 2011, Smithfield Foods net income was $0.521 billion, or $3.12 per diluted share. Smithfield is also the largest meat processing company in the United States, with brands such as Smithfield.®,Eckrich®,Farmland®,Armour®,Cook's®,Gwaltney®,John Morrell®,Kretschmar®,Curly's®, Carando®,Margherita®and Healthy Ones®.

Under the terms of an agreement unanimously signed by both shareholders, Shuanghui purchased shares of Smithfield at $34 per share. Based on the purchase price of the shares and the closing price of Smithfield on May 28, 2013, the premium is approximately 31%.

Completion of the closing is also subject to certain conditions, including obtaining Smithfield shareholder approval, obtaining CFIUS approval in accordance with the relevant requirements of U.S. and specialized foreign antitrust and anti-competition laws, and a number of other closing terms. Upon completion of the acquisition, this new global pork company will have more access to the world's largest and growing Chinese market and maintain world-leading food safety and quality control standards.

The merger between Shuanghui and Smithfield is positive for the North American hog industry. After the merger, China will import more pork from the United States. The United States has a price subsidy for any pork exported. After a successful merger, the North American hog market will increase by 5 cents per pound of pork in the next 5 to 10 years.

http://www.thepigsite.com/swinenews/33347/pork-commentary-smithfield-foods-sale-a-real-game-changer

(Responsible editor: Shixin)