Smithfield deal 'great' for US shareholders: CEO

Some analysts predict the Smithfield deal will be a watershed event that will lead to more transactions tied to an ambitious effort by Beijing to obtain raw materials and technology needed to run China's growing economy. China's robust growth over the past three decades, putting it on course to overtake the US as the world's largest economy by 2020, has been accompanied by problems with food security and safety, as well as environmental pollution and health care.

Erik Gordon, a law professor at the University of Michigan Law School and Ross School of Business, told China Daily in an interview Sunday that any unexpected developments tied to the deal could affect the outlook for future Chinese acquisitions in the US.

More deals could be in the offing "if Smithfield works out well for the Americans over the next five years", Gordon said. But "if Americans are fired, if Smithfield refuses to disclose information that is customarily disclosed in the US, or if anything else that is unusual happens, it will increase the fears and suspicions," Gordon said. "If China wants to acquire more US companies, it will have to handle Smithfield carefully," he said.

Smithfield and Shuanghui have said the acquisition won't result in major changes to Smithfield's management or workforce. Smithfield has more than 46,000 employees. With annual revenue of $13 billion, it has facilities in 26 US states, including the world's largest slaughterhouse and meat-processing plant, in North Carolina. It also has operations in Mexico and 10 European countries.

Michael Swanson, agricultural economist for Wells Fargo & Co Bank in Minnesota, said he expects the Smithfield acquisition will pave the way for more deals by providing a way for Chinese protein companies to learn how to manage food-related diseases. "Given the longer historical emphasis on food safety, US protein companies will have an advantage in controlling food borne pathogens until Chinese processors adopt the capital and practices required to compete," the analyst said.

The acquisition will help China, the world's largest consumer of pork, meet growing demand for the meat as its ever-prosperous citizens eat more protein. Smithfield's brands include its namesake ham, Farmland bacon and Healthy Ones lunch meats. It raises some 15 million pigs a year and processes 27 million, producing more than 2.7 billion kilograms of pork. Shuanghui, based in Henan province, owns businesses in food production, logistics and flavorings.

The Smithfield acquisition is China's largest cross-border deal since CNOOC Ltd paid $15.1 billion last year for Canadian oil and gas producer Nexen Ltd.

Shuanghui, China's biggest meat processor, will pay Smithfield shareholders $34 cash for each share held, a 31 percent premium to the price when the deal was announced in May.