Smithfield gets US security OK for Chinese takeover

The takeover of US pork giant Smithfield Foods by China's Shuanghui International Holdings has received approval from a key US national security review, the two companies announced Friday. The high-level Committee on Foreign Investment in the United States has approved the $7.1 billion deal, which would put the Chinese company in control of the world's largest swine grower and pork processor, they said. The committee, which operates under the US Treasury, investigates any major foreign purchase of a US business that could be seen as damaging national security. The clearance was an important hurdle to pass before the takeover goes ahead. "We are pleased that this transaction has been cleared by CFIUS, and we thank the committee for its careful attention to this review," Smithfield chief executive and president Larry Pope said in a statement. But the deal still faces a shareholder challenge. Earlier this week a key investor, Starboard Value, called on other shareholders to oppose the deal, arguing that the company would be worth more if broken up and sold piece by piece. The two companies announced the deal on May 29, with Shuanghui -- which controls one of China's largest meat processors -- offering $4.5 billion in cash for the American company, whose name has long been closely identified with US pork products. Adding the debt Shuanghui will take on, the deal's overall value went to $7.1 billion. But some politicians expressed concerns about the takeover of the company, especially given China's huge demand for pork imports and rising prices in the US market, as well as concerns over whether the Chinese company would adhere to adequate sanitary standards. Shuanghui has insisted it will keep the company's US operations and brands, and would uphold safety standards. "This transaction will create a leading global animal protein enterprise," Shuanghui chief executive Zhijun Yang in the statement Friday. "Shuanghui International and Smithfield have a long and consistent track record of providing customers around the world with high-quality food, and we look forward to moving ahead together as one company." The two companies have set September 24 for a special Smithfield shareholders meeting to ratify the deal. But earlier this week Starboard, which holds 5.7 percent of the company, said it would vote in opposition, and urged others to do so as well. Starboard said the company is worth $9-10.8 billion if broken up, and that it had identified potential buyers of various units. But until now no other formal offers have been announced.