Sept 6 The U.S. Committee on Foreign Investment
has cleared the way for Shuanghui International Holdings Ltd's
proposed $4.7 billion acquisition of Smithfield Foods Inc
, the companies said on Friday.
The deal, which would be the biggest purchase of a U.S.
company by a Chinese firm, still needs shareholder approval at a
special meeting scheduled for Sept. 24.
Shuanghui and Smithfield expect the transaction, valued at
$7.1 billion including debt, to close shortly after that
Experts in Washington and on Wall Street had expected the
deal to get the nod from the Committee on Foreign Investment in
the United States (CFIUS), an inter-agency executive branch
panel that examines foreign investment for potential threats to
They also do not expect a move by a major investor to block
Activist hedge fund Starboard Value LP, which has a 5.7
percent stake in Smithfield, is searching for an alternative
buyer for Smithfield and has said it would vote against the
Shuanghui's bid, which aims to satisfy China's growing
appetite for pork, stirred concern about food safety and
domestic pork supplies among some U.S. politicians and faced
review by a committee of several government agencies overseen by
the Treasury Department.
As international interest in American companies has risen
dramatically in recent years, CFIUS reviews have increased in
number. Since 2007, CFIUS reviews of deals involving Chinese
firms have tripled. Reviews of Japanese firms have increased
Although Congress cannot approve or block deals, lawmakers
can force companies to abandon their merger plans. They did so
in 2005 when China's CNOOC Ltd made an unsuccessful
bid to buy U.S.-based Unocal for $18 billion.
Some experts compared the Shuanghui-Smithfield combination,
which would marry two of the world's largest pork producers, to
the 2012 takeover of AMC Theaters by China's Dalian Wanda Group
for $2.6 billion. That transaction was allowed to proceed when
the CFIUS determined the deal posed no threat to national
Shares in Smithfield rose 1.7 percent to $34.49 in extended