Shuanghui announced on May 28 that it had entered into a merger agreement with Smithfield to purchase the company for $34 a share – a 31% premium to its share price – and assume $2.4 billion of the company’s debt in a $7.1 billion leveraged buyout.
But the deal process was complicated. Two other companies – thought to be Chaoren Pokphand Foods and JBS – had expressed interest in Smithfield and had submitted non-binding written proposals in early May. Smithfield delivered a draft merger agreement on May 13.
But another bidder approached the target on May 21 with a better offer. Smithfield then requested that all interested parties submit their best and final offer with executed financing commitments by May 31.
But on May 22, one interested party said that it would not be able to execute or announce any potential transaction until June 13. On the same day, the other party said that because it was a US competitor, a deal may trigger antitrust issues. But the merger agreement it submitted the next day did not make a substantive proposal in terms of antitrust risk allocation.
On May 24 Shuanghui said that its last and final offer was $33.50 per share in cash, and included a markup of the draft merger agreement as well as fully binding commitment letters from the financing banks. The firm indicated that if the parties did not sign by May 28 – the original proposed signing date – the offer would be withdrawn. A merger agreement was signed on May 28.
Following the deal’s announcement, Starboard Value, an activist investor which owned approximately 5.7% of the company, planned a counterbid proposing to break the company into three separate entities. But it failed to submit an alternative.
The deal received Cfius clearance and shareholder approval in September and closed on September 26.
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