Shuanghui: Smithfield acquisition allows us to be a global leader in animal protein

By Stephen DANIELLS

- Last updated on GMT

Shuanghui: Smithfield acquisition allows us to be a global leader in animal protein

Related tags: United states

The acquisition of pork and meat producer Smithfield Foods Inc. for about $4.8 billion by Shuanghui Group can create a global leader in animal protein, say top executives at both companies.

Shuanghui, based in Henan province in China, has agreed to pay $34 per share (31% more than Tuesday's final share price of $26) for Smithfield, whose brands also include John Morrell, Armour and Farmland.

Speaking with investors during an M&A call Wednesday, Yang Zhijun Managing Director of Shuanghui International said the deal can make the combined company a global leader in animal protein.

“China and the U.S. are the most important markets. We are #1 in China. Smithfield is #1 in the U.S. No other combination has such a great opportunity. Chinese consumers like American pork. U.S. farmers want foreign markets for their pork. Growing this export market will be a win-win for both countries.”

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Larry Pope, CEO, president, executive director and member of executive committee for Smithfield said the combination of the two companies will accelerate both companies' strategic plans, broaden market reach and create growth opportunities.

“Not only is this a great transaction for our company and our customers, there are also significant benefits for American farmers and U.S. agriculture,” ​he said. “It creates a stronger Smithfield with more resources to grow and meet increasing global demand for high-quality pork. Shuanghui is committed to investing in Smithfield to produce more food, more jobs and more value in the United States.”

Pope added that the acquisition would not impact jobs or employee responsibilities in any way, and he assured employees that there will be no closures of Smithfield facilities and locations.

The deal, which should be finalized in the latter part of the year, could be the biggest transaction for a US food producer by a Chinese company.

“This is certainly a large transaction between China and the United States even -- across any industry. And I bet I think it may be the largest,” ​said Pope. “But I think it's a natural transaction. China is a big pork consumer. It's pork-deficit area of the world. We have low-cost, high-quality products to export there.”

Pork protein only

Yang added that the intention of the transaction is to build a “globally competitive and a leading pork protein producer, and we see a lot of synergies between Shuanghui International and Smithfield Foods.”

Over the past three decades, the Shuanghui Group, has enjoyed sales growth of more than 30%, he added.

“In China, Shuanghui is focused on the processing of pork protein,” ​he said via an interpreter. “So other than pork, for now, we don't have other intentions into expanding to other proteins.”

 

 

 

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