Shareholder faults Smithfield merger plan
RICHMOND, Va. — One of Smithfield Foods Inc.'s largest shareholders said Tuesday that it plans to vote against the pork producer's proposed takeover by China's largest meat producer because it wants more time to seek other offers that would provide greater shareholder value.
New York-based investment firm Starboard Value LP, which owns about 5.7 percent of Smithfield's common stock, sent a letter to the Smithfield, Va.-based company's shareholders Tuesday saying it intends to vote against the deal struck with Shuanghui International Holdings Ltd. at a scheduled Sept. 24 meeting in Richmond.
Shuanghui announced that it has secured about $4 billion in financing for the deal in which Smithfield will sell itself for $34 per share, or $4.7 billion.
The deal, which is expected to close by the end of the year, would be the largest takeover of an American company by a Chinese firm, valued at about $7.1 billion including debt. It still requires approval of the federal Committee on Foreign Investment in the United States, which reviews overseas transactions for national-security implications. Smithfield's stock will no longer be publicly traded once the deal closes.
Smithfield has promoted the deal as opening the door to substantial increases in exports to China, but critics have voiced worry about persistent problems with food safety in China.
In the letter Tuesday, Starboard said it has received written interest from other parties to buy Smithfield's assets at a higher value than being offered under the current proposal. While the firm has come “quite a long way,” it needs more time to put the alternative proposal together. Starboard said it hopes its vote will compel Smithfield to delay the shareholder meeting so that it can have more time.
Starboard sent a letter to Smithfield's board of directors in June, saying the proposed deal falls short of what the company would be worth if sold off piece by piece. The investment firm estimated the company's value at $9 billion to $10.8 billion, or about $44 to $55 per share.
Starboard had said that while the deal with Shuanghui does offer some value, shareholders would be better served if the company focused on selling its various divisions, which include fresh pork and hog production businesses, as well as an international division. Smithfield, whose brands include Armour, Farmland and its namesake, has been focusing on its packaged meats business, which sells deli meats, bacon, sausage and hot dogs.
Because Smithfield is contractually prohibited from superior offers or contacting others who may be interested in acquiring parts of the company, the investment firm sought to find other buyers.
Smithfield declined to comment. Its shares rose 19 cents to $33.72 in afternoon trading Tuesday.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Visual search still hampered by image issues
- EDMC reaches debt-restructuring deal with creditors
- States clear way for startups to use crowdfunding
- U-PARC houses companies ranging from innovative to traditional
- EDMC to cut costs, roll out new grant
- Deported migrants find home at call centers
- Students walk shop class path to excellence
- DQE Communication inks data deal with Iron Mountain
- Lower your cable bill by streaming shows
- Young adults drive home rental trend in Western Pennsylvania
- Government approves compromise on Corbett’s alternative Medicaid plan