Weekend Economists Kickoff the Season, September 6-8, 2013

[DemReadingDU]

30. Smithfield Receives U.S. Approval for Biggest Chinese Takeover

9/6/13 Smithfield Receives U.S. Approval for Biggest Chinese Takeover

Smithfield Foods Inc. (SFD), the world’s largest hog and pork producer, said U.S. regulators will allow the company to be bought by China’s Shuanghui International Holdings Ltd. in what would be the biggest Chinese purchase of a U.S. firm. “This transaction will create a leading global animal protein enterprise,” Zhijun Yang, Chief Executive Officer of Shuanghui International, said in a joint statement from both companies released yesterday.

The Committee on Foreign Investment in the U.S., or CFIUS, approved the transaction and it will be voted on by Smithfield shareholders at the company’s annual meeting Sept. 24. The government of Ukraine also approved the deal, according to the statement.

Shuanghui, based in Hong Kong, said May 29 it would buy Smithfield for $4.72 billion in a deal that has drawn scrutiny from senior members of Congress in both U.S. political parties, including Senate Finance Committee Chairman Max Baucus, a Democrat from Montana, and Orrin Hatch, a Republican from Utah, who had asked for a “thorough review” of the plan.

CFIUS blocked at least three transactions in the past four years that would have resulted in Chinese companies gaining control of assets near military facilities. Huawei Technologies Co. and Bain Capital Partners LLC also dropped a bid to buy computer equipment maker 3Com Corp. in 2008 in the face of opposition from CFIUS.

The committee, led by the Treasury Department, is made up of representatives from the Justice, Homeland Security and Defense departments and five other agencies, any of which might have particular concerns about a takeover by a given foreign buyer. Elizabeth Bourassa, a spokeswoman for the Treasury Department, declined to comment.

more...
http://www.bloomberg.com/news/2013-09-06/smithfield-receives-u-s-regulator-approval-for-shuanghui-deal.html