Believe it or not, there is a fairly large move to bring the US into the position of purely importing all food. If you still eat pork, might I suggest that there is no better reason to source it from a small local producer than Smithfield, the biggest pork producing corporation in the US, being purchased by the Chinese. Here’s an article about it:
Shuanghui buying Smithfield Foods for about $4.72B
By MICHAEL FELBERBAUM
RICHMOND, Va. (AP) — Chinese meat processor Shuanghui International Holdings Ltd. has agreed to buy Smithfield Foods Inc. for approximately $4.72 billion in a deal that will take the world’s biggest pork producer private.
Hong Kong-based Shuanghui owns a variety of global businesses that include food, logistics and flavoring products and is China’s largest meat processing enterprise. Smithfield owns brands such as Armour, Farmland and its namesake.
Shareholders of Smithfield will receive $34 per share under terms of the deal announced Wednesday — a 31 percent premium to the Smithfield, Va., company’s closing stock price of $25.97 on Tuesday.
Both companies’ boards have unanimously approved the transaction, which still needs approval from Smithfield’s shareholders. The transaction may also be subject to review by the U.S.’s Committee on Foreign Investment.
The companies put the deal’s total value at about $7.1 billion, including debt. Smithfield Foods has about 138.8 million outstanding shares, according to FactSet. Smithfield’s stock will no longer be publicly traded once the deal closes.
Its shares surged $7.23, or 27.8 percent, to $33.20 in premarket trading Wednesday.
Shuanghui has 13 facilities that produce more than 2.7 million tons of meat per year. Under the agreement, there will be no closures at Smithfield’s facilities and locations, including its Smithfield, Va., headquarters, the companies said.
Smithfield’s existing management team will remain in place and Shuanghui also will honor the collective bargaining agreements in place with Smithfield workers. The company has about 46,000 employees.
In a news release on Wednesday, Smithfield CEO Larry Pope called the move a “great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture.”
In recent months, Smithfield’s second-largest shareholder, Continental Grain Co., has been pushing Smithfield to consider splitting itself up, saying it was time for the company to “get serious about creating shareholder value.” Following a March letter from Continental Grain, Smithfield said it would review the suggestions “in due course.” Representatives from Continental Grain did not immediate provide comment regarding Wednesday’s news.
In its most recent quarter, in March reported its net income rose more than 3 percent, helped by gains in hog production, its international business and its packaged meats such as deli meats, bacon, sausage, and hot dogs — a large growth area for the company.
Still pork producers like Smithfield have been caught in a tug of war with consumers. The company needs to raise prices to offset rising commodity costs, namely the corn it uses for feed. But consumers are still extremely sensitive to price changes in the current economy. By raising prices, Smithfield risks cutting into its sales should consumers cut back or buy cheaper meats, such as chicken.