Proposed Sale Of Smithfield To Chinese Company Has Some Critics Squealing, While Others Say It Will Bring Home The Bacon

by King & Spalding

Smithfield Foods, Inc. announced that it had entered into a definitive merger agreement with Chinese holding company Shuanghui International Holdings Limited on May 29, 2013. Based in Virginia, Smithfield is the world's largest pork processor and hog producer. The company also sells packaged meats in the United States under a number of brand names. Shuanghui International is the majority shareholder of Henan Shuanghui Investment & Development, the largest meat processing enterprise in China. Shuanghui International will acquire all outstanding shares of Smithfield Foods and also will acquire Smithfield's debts. If the $4.7 billion deal goes through, it will be the largest acquisition of a U.S. consumer brand by a Chinese firm.

The impact that the merger would have on the Virginia economy is unclear at this point. Shuanghui has committed to keeping the headquarters of Smithfield in Virginia and to retaining Smithfield's management team and workforce. Many critics, however, remain skeptical that jobs will remain in the United States in the long term. Smithfield employs an estimated 3,800 people in Virginia, many of them in the town of Smithfield where the company was founded. On the other hand, Virginia officials have argued that the deal will actually help the local economy by encouraging exports to China. The market for pork has grown rapidly in China in the last 35 years. China consumed approximately 52 million tons of pork in 2012, compared to 10.4 million tons in the United States. Proponents of the deal hope that Smithfield will be able to focus on exports to China in order to spur growth in the company and the local economy as a whole.

Critics have voiced other concerns about the proposed sale to Shuanghui International. Shuanghui International has found itself at the center of controversy over food safety in recent years and was even forced to close a plant in China two years ago after feeding pigs at the facility a banned additive. In addition, the Wall Street Journal reports that at least one shareholder has gone to Smithfield's Board of Directors claiming that breaking the company into three parts and selling the parts would lead to a higher share price than the proposed deal with Shuanghui International.

The deal is currently under review by the Committee on Foreign Investment in the United States ("CFIUS"). CFIUS reviews foreign investments in U.S. companies or operations in order to assess whether the transactions pose national security risks. CFIUS members include the Departments of Justice, Homeland Security, Commerce, Defense, State and Energy; the Office of the United States Trade Representative ("USTR"); and the Office of Science and Technology Policy. On June 20, 2013, fifteen senators sent a letter to Treasury Secretary Jacob Lew asking that the Department of Agriculture and the Food and Drug Administration participate in the CFIUS review process. According to the letter, "[a]ny CFIUS review…should look beyond any direct impact on government agencies and operations to the broader issues of food security, food safety and biosecurity." Many experts, however, anticipate that food safety concerns will not be sufficient for CFIUS to deem the deal to be a threat to national security.

Shannon Doyle

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© King & Spalding | Attorney Advertising

Written by:

King & Spalding

King & Spalding on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.