by Gao Pan
WASHINGTON, Sept. 24 (Xinhua) -- Shareholders of Virginia-based Smithfield Foods approved Tuesday the acquisition by Chinese company Shuanghui International Holdings, clearing the last major hurdle to close the landmark deal.
More than 96 percent of votes cast at a special meeting of Smithfield shareholders were in favor of the transaction, which represents approximately 76 percent of the company's total outstanding shares of common stock, according to a statement released by Smithfield.
The deal, which combines the world's largest pork producer Smithfield with Shuanghui, the largest meat producer in China, is valued at about 7.1 billion U.S. dollars in total, including debt.
Smithfield expected to close the deal by Sept. 26, 2013, and once completed, it will become the biggest purchase of a U.S. company ever by a Chinese firm.
Smithfield shareholders will receive 34 dollars per share in cash for each share of common stock they own, and the company will continue to operate under its existing brand names as a subsidiary of Shuanghui International.
"This is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture," Smithfield Chief Executive Larry Pope said.
"The partnership is all about growth, and about doing more business at home and abroad. It will remain business as usual -- only better -- at Smithfield," he added.
Shuanghui agreed the deal in May, and earlier this month won approval from the Committee for Foreign Investment in the United States (CFIUS), a government panel tasked with reviewing the national security risks of foreign acquisitions.
"Despite political noise from Congress, the CFIUS process stuck to its national security mandate and rightly approved the transaction," Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, a Washington D.C.-based think tank, told Xinhua.
Some U.S. lawmakers have expressed concerns that the acquisition of Smithfield by a Chinese company could pose a threat to U.S. food security.
Smithfield has reassured investors and customers that the deal was not about bringing Chinese pork products to the United States, but about exporting U.S. pork products and expertise to meet the growing demand of China's middle class. Both Shuanghui and Smithfield will continue to commit to producing high quality food products.
This deal shows "China's firms are eager to build their ability to service more sophisticated consumers," Daniel Rosen, the founding partner of Rhodium Group, a New York-based advisory firm that focuses on Chinese business, told Xinhua.
This should put an end to old beliefs that "Chinese firms are only interested in natural resources," he said.
Recent Chinese investment in the United States has shown that Chinese firms are gearing up for a more consumer-based growth model in China, with growing interest in consumer goods, healthcare and technology assets, Thilo Hanemann, a research director at Rhodium Group echoed Rosen.
Shuanghui said it is "especially attracted by Smithfield for its strong management team, leading brands and vertically integrated model" and it will learn a lot from the industry leader.
Therefore, it will be a win-win deal that benefits both countries and advances China-U.S. relations. As China is rebalancing its economic growth model and has agreed to start negotiation on a bilateral investment treaty with Washington, Chinese investments in the United States should not always raise real concerns, but be welcome.