Smithfield, Shuanghui Receive CFIUS Clearance

WASHINGTONShuanghui International Holdings Limited has cleared a major hurdle to its $7.1 billion acquisition of Smithfield Foods, Inc. following approval of the agreement by the Committee on Foreign Investment in the United States (CFIUS).

Separately Friday, Smithfield and Shuanghui announced receiving government clearance in Ukraine.

CFIUS had examined the merger for national security concerns. It is unclear whether the agency looked at food safety as part of its investigation following requests by some lawmakers to include the U.S. Food and Drug Administration and U.S. Department of Agriculture in a review of what represents the largest acquisition of an American company by a Chinese business.

"It remains unclear what factors the Committee took into account in making its decision," said Sen. Debbie Stabenow, (D-Mich.), who chairs the U.S. Senate Committee on Agriculture, Nutrition and Forestry, in a statement. "We still do not know if the potential impact on American food security, the transfer of taxpayer funded innovation to a foreign competitor, or Chinas protectionist trade barriers were considered."

Next up: a vote by Smithfield's shareholders on Sept. 24. Shareholders stand to receive $34 per share in cash for each share of Smithfield common stock they own.

Shuanghui anticipates closing the acquisition if and shortly after Smithfield shareholders approve the agreement.  

CFIUS approval was announced the same day Smithfield reported its earnings, reflecting challenges in its fresh pork and international businesses. Under the acquisition, Smithfield will continue to operate under its existing brand names as a wholly-owned subsidiary of Shuanghui International.

"This transaction will create a leading global animal protein enterprise," said Zhijun Yang, chief executive officer of Shuanghui International, in a statement.