WASHINGTON - China's Shuanghui International has agreed to buy U.S. pork icon Smithfield Foods (IW 500/94) in a deal valuing Smithfield at $7.1 billion, the two companies said Wednesday.
Shuanghui, which controls China's largest food-processing company, will pay $4.7 billion in cash and assume the debt of Smithfield, one of the largest meat processors in the United States.
That represents $34 a share for each for the outstanding shares of Smithfield, a premium of 31% over Tuesday's closing price.
"The acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui's distribution network," said Shuanghui chairman Wan Long in a statement.
"Shuanghui will gain access to high-quality, competitively-priced and safe U.S. products, as well as Smithfield's best practices and operational expertise," he said.
Shuanghui is a Hong Kong-based investment group with holdings in food and logistics, including a controlling interest in Henan Shuanghui Investment & Development, China's largest meat processor, according to the company.
Smithfield is a powerhouse in U.S. processed meat, with popular brands including Smithfield, Armour, Eckrich and Healthy Ones.
Smithfield earned $361 million in the year to April 29, 2012, on sales of $13.1 billion.
Shuanghui said in the announcement that it would not change the management of Smithfield after the acquisition is completed and Smithfield is delisted from the New York Stock Exchange.
The firm said it will keep the company's headquarters in Smithfield, Va., and honor existing union agreements.
"It will be business as usual -- only better -- at Smithfield. We do not anticipate any changes in how we do business operationally in the United States and throughout the world," said Smithfield CEO Larry Pope.
The deal still needs the approval of the Committee on Foreign Investment in the United States, which reviews transactions that could result in foreign control of a U.S. business and may create security concerns.
Copyright Agence France-Presse, 2013