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Thread: China's Largest Meat Processor to Buy Smithfield Ham

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    China's Largest Meat Processor to Buy Smithfield Ham

    Bringing home the Bacon.
    Looks like a blue chip buy for the country with the largest appetite for pork.
    at near $5 billion, the largest takeover of a US company.
    Still pending approvals of course.

    China's Largest Meat Processor to Buy Smithfield Ham - US News and World Report
    By MEG HANDLEY
    May 29, 2013
    The southern culinary icon announced it will become part of Shuanghui International Holdings in largest takeover of a U.S. company by a Chinese buyer

    In what is shaping up to be the Largest takeover of a U.S. company by a Chinese buyer, Smithfield Ham – an icon in southern cooking – agreed to be bought out by Chinese meat producer Shuanghui International Holdings Wednesday.

    Shuanghui – China's largest meat processor – will pay $34 a share to purchase Smithfield, 31% above the company's closing share price on Tuesday, according to a press release announcing the deal. The total purchase price is close to $5 billion.

    Other brands under the Smithfield umbrella include Armour, Eckrich, and Healthy One. The company's history dates back to 1936 when the Luter family set up shop in Virginia.
    [.......]
    Last edited by mbig; 05-29-13 at 08:10 PM.
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    Re: China's Largest Meat Processor to Buy Smithfield Ham

    When Budweiser was bought by Inbev I was actually a little saddened (not that I'm a Bud fan , mind you) but no big deal.

    Smithfield bought by the Chinese somewhat scares me. Couple Smithfield's record with Chinese business practices and records and you have a recipe for disaster (pun intended)

    Look at the % of American pork, beef and chicken processed by Smmithfield. Staggering.

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    Re: China's Largest Meat Processor to Buy Smithfield Ham

    This is a good buy for them. They are not going to treat Smithfield hams like cheap dogfood.

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    Re: China's Largest Meat Processor to Buy Smithfield Ham

    Quote Originally Posted by ForcedAppeal View Post
    When Budweiser was bought by Inbev I was actually a little saddened (not that I'm a Bud fan , mind you) but no big deal.

    Smithfield bought by the Chinese somewhat scares me. Couple Smithfield's record with Chinese business practices and records and you have a recipe for disaster (pun intended)

    Look at the % of American pork, beef and chicken processed by Smmithfield. Staggering.
    Well, they sure don't have a good record with doggy chews.
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    Re: China's Largest Meat Processor to Buy Smithfield Ham

    Quote Originally Posted by Fisher View Post
    This is a good buy for them. They are not going to treat Smithfield hams like cheap dogfood.
    Now do you know?

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    Re: China's Largest Meat Processor to Buy Smithfield Ham

    Quote Originally Posted by fmw View Post
    Now do you know?
    They are paying about 5 billion dollars in total (when including debt) to buy the company, they are not going to want that money go to waste.

    I expect one reason for the purchase it for the chinese company to get the HSE practices of Smithfield (and the name) in order to build and defend its market share in China. If the chinese company can build a reputation for high quality and safe food, it could earn 15-20% more in China. Foreign baby formula sell at higher prices in China then they do in the US or UK, because they are considered safe products
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    Re: China's Largest Meat Processor to Buy Smithfield Ham

    Quote Originally Posted by fmw View Post
    Now do you know?
    Because they will still be made in the US and subject to the F part of the FDA regulations

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    Re: China's Largest Meat Processor to Buy Smithfield Ham

    I will eat nothing made in China and neither will my dogs.

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    Re: China's Largest Meat Processor to Buy Smithfield Ham

    Lots of implications, rationale, and players in this deal.
    Chinese really can't lose if this deal goes through.
    Just getting to use Labels like Smithfield and Armour is worth a few billion. Not to mention the company profits and cheaper pork.

    May 30, 2013, 10:40 a.m. ET
    Smithfield Deal Signals China's Need for Meat, Dairy, Other Food Buys - WSJ.com
    Smithfield Deal Signals China's Need for Meat, Dairy, Other Food Buys
    By CHUIN-WEI YAP
    BEIJING—China's growing appetite is driving ever-larger acquisitions of global food assets as the shifting dietary profile of the world's most populous nation increasingly puts meat, dairy and processed-food producers into play.

    Underscoring the trend, China's Shuanghui International Holdings Ltd. on Wednesday said it agreed to acquire Smithfield Foods Inc. SFD -1.83% of the U.S. for $4.7 billion, aiming to secure more pork for Chinese markets.

    The proposal is the largest in more than a decade of Chinese ventures to snap up food companies abroad. Other purchases have included state-owned Cofco Corp.'s buying Australian sugar producer Tully Sugar Ltd. last year for about $140 million and Shanghai-based Bright Food (Group) Co.'s 2011 purchase of Manassen Foods Australia Pty. Ltd. for an estimated $522 million including debt. Bright Food said last year it would acquire control of U.K. cereal maker Weetabix Food Co.

    The purchases are part of a broader effort by Beijing to secure the raw materials needed to feed its fast-growing economy. Chinese state-controlled companies in recent years have struck big energy and mining deals. But many of the country's food investments have had lower profiles.

    Shuanghui's bid for Smithfield, the world's largest hog farmer and pork processor, signals that not just any dish will do. As China becomes richer, relatively expensive protein is becoming a bigger portion of the domestic diet.

    "It is part of the broad Chinese strategy to invest the country's current-account surplus into strategically important commodities. [......]

    With big-name backers, Chinese firm eyes Smithfield's know-how, brands
    https://news.fidelity.com/news/news....sting.RT&IMG=Y
    REUTERS — 9:59 AM ET 05/30/13
    By Kazunori Takada and Dominique Patton
    SHANGHAI/BEIJING (Reuters) - In three decades, Wan Long has turned Shuanghui International Holdings from a small, loss-making meat processor into China's largest, and is making his country's biggest takeover of a U.S. company - the $4.7 billion acquisition of Smithfield Foods Inc , the world's leading pork producer. Along the way, the tough negotiating Wan, who also sits on the National People's Congress, China's legislature, has had the backing of Goldman Sachs , Singapore state investor Temasek Holdings and Wen Yunsong, or Winston Wen, son of former Premier Wen Jiabao, among others.

    Wan, who is dubbed 'China's Chief Butcher', and Shuanghui's connection to Winston Wen gives the firm direct access to power brokers and key decision makers in Beijing through a powerful princeling stakeholder. The ties with Wen are through private equity firm New Horizon, which holds its stake in Shuanghui through two investment vehicles, according to a 2012 research report from China Investment Capital Corp.

    While Wen stepped away from day-to-day operations at New Horizon three years ago - he left to work for China Aerospace Science & Technology Corp, and last year became chairman of China Satellite Communications Corp, according to media reports - he remains involved in the fund and derives income from its investments, people with knowledge of the matter told Reuters.

    Shuanghui's acquisition of Virginia-based Smithfield Foods will face scrutiny by the Committee on Foreign Investment in the United States (CFIUS), a government panel that assesses national security risks. At least one member of Congress has said the deal raises alarms about food safety. Shuanghui was forced to recall its Shineway brand meat products from store shelves in China two years ago amid fears that some of it contained a banned feed additive.

    BRANDS, KNOW-HOW

    Political scrutiny and cheaper pork supplies apart - average live hog prices in China are around a third higher than in the United States - much of the appeal for Shuanghui will be in Smithfield's technology, quality savvy and packaged meat business.

    The U.S. company owns well-known grocery store meat brands such as Eckrich, Armour and Farmland, which are likely to prove popular with Chinese consumers who consider foreign brands safer than many home-grown products. [......]
    Last edited by mbig; 05-30-13 at 07:50 PM.
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