Smithfield Foods and Shuanghui International Holdings Limited, majority shareholder of China's largest meat processing company, Wednesday announced the two companies would complete a merger in the second half of 2013.
Under the agreement, Shuanghui will acquire all of the outstanding shares of Smithfield for $34 per share in cash. The deal values Smithfield at more than $7 billion.
Upon closing of the transaction, Smithfield's common stock will cease to be publicly traded, a company announcement said. Smithfield will be a wholly-owned independent subsidiary of Shuanghui International Holdings Limited, operating under the name Smithfield Foods.
There are currently no plans to close any facilities or locations, and the existing management team will remain. Shuanghui has pledged to maintain Smithfield's headquarters in Smithfield, Va.
Wan Long, Shuanghui chairman, explained that the deal will allow Smithfield to expand into China through Shuanghui's distribution network, while Shuanghui will gain access to "high-quality, competitively-priced and safe U.S. products" to meet China's growing demand for pork.
Wan noted that Shuanghui will also take advantage of Smithfield's best practices and operational expertise.
C. Larry Pope, president and chief executive officer of Smithfield, in a statement said the deal is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture. Pope said after the merger goes through it will be "business as usual" and did not expect any changes in how the company operates in the U.S.