Shuanghui-Smithfield merger explained

Author: Ashley Lee | Published: 23 Oct 2013
  • Shuanghui’s acquisition of Smithfield was the largest-ever Chinese take-over of a US company;
  • The deal was a competitive process which required the inclusion of several innovative features - including a limited go-shop and bespoke break-fee arrangements – to maintain a level of deal certainty, while also allowing target directors to fulfill their fiduciary duties;
  • The merger agreement accounted for regulatory risk, particularly regarding US national security approval and review;
  • The deal signals that the US, including the country’s security review authority, is open to investment from privately-owned Chinese companies.

Shuanghui’s $4.7 billion acquisition of US pork processor Smithfield was the largest Chinese takeover of a US company. It signals that the US is open to Chinese investment.

The acquisition of Smithfield, the world’s largest pork processor, prompted...