Tags: China | Shuanghui | Smithfield | pork

WSJ: Chinese Takeover of Smithfield Foods May Help Both Countries

By    |   Friday, 31 May 2013 08:26 AM

The proposed $4.7 billion takeover of Smithfield Foods by Shuanghui International, a holding company based in Hong Kong, can benefit both the United States and China, according to a Wall Street Journal editorial.

"[T]he deal will be healthy for both countries if it proves to be an education in the benefits of open world-wide investment," Journal editors write.

Smithfield is the world's largest hog producer and pork processor, while Shuanghui is the majority shareholder of China's largest meat processor, Henan Shuanghui. The latter is publicly traded rather than owned by the government.

Editor's Note:
 
'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

Shuanghui plans to allow the company to operate independently and won't axe CEO Larry Pope or senior management.

Pope told analysts that Smithfield would increase exports and gain a larger geographical footprint through the deal.

"China's appetite for pork and other high-quality protein has been climbing along with middle-class incomes, though the government has sharply limited foreign access to its food markets," the editorial states.

"Shuanghui's Smithfield bid may also do some good if it helps import Western farm and food standards and environmental practices along with Virginia hams."

Over the past few years China has suffered several food-safety scandals.

The Committee on Foreign Investment in the U.S. (CFIUS), which can review foreign takeovers for national security implications, may have a look at this deal.

“On the one hand, pork is not directly an issue of national security, as defense or telecom might be,” Ken Goldman, an analyst for JPMorgan Chase, said in a report obtained by Bloomberg.

“On the other hand, if CFIUS comes to believe that Chinese ownership of the U.S.’ largest hog farmer and pork supplier presents a food supply risk, then it may have a heightened concern.”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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The proposed $4.7 billion takeover of Smithfield Foods by Shuanghui International, a holding company based in Hong Kong, can benefit both the United States and China, according to a Wall Street Journal editorial.
China,Shuanghui,Smithfield,pork
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2013-26-31
Friday, 31 May 2013 08:26 AM
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