The U.S. Committee on Foreign Investment Friday approved a $4.7 billion acquisition of Smithfield Foods, Inc., by Chinese-based Shuanghui International Holdings, Ltd.
The deal is subject to Smithfield shareholder approval and other closing conditions, a company announcement said. Smithfield's shareholders are scheduled to vote on the transaction at a special shareholders meeting later this month.
CFIUS reviewed the deal to determine if the effects of the transaction would be a hindrance to national security. It was also questioned by the Senate Agriculture Committee during a special hearing in June.
But company leadership stands by the acquisition, calling it a transaction that "will create a leading global animal protein enterprise," according to Zhijun Yang, Shuanghui CEO.
"Shuanghui International and Smithfield have a long and consistent track record of providing customers around the world with high-quality food, and we look forward to moving ahead together as one company," he noted.
Smithfield Chief Executive Officer and President C. Larry Pope added, "We are pleased that this transaction has been cleared by CFIUS, and we thank the Committee for its careful attention to this review."
The deal has significant trade implications for the U.S. pork industry, economists have noted. Purdue University's Chris Hurt said earlier this year that the merger, which allows Smithfield to retain operations as normal in the U.S., could bring a larger market share to U.S. pork producers.
But benefits could come along with risks, Hurt added, citing loss of market control and big differences in social and political policies of the U.S. and China.
The deal was initially announced in May. Under the agreement, Shuanghui will acquire all of the outstanding shares of Smithfield for $34 per share in cash, and upon closing of the transaction, Smithfield's common stock will cease to be publicly traded.