The government has decided to take an additional 45 days to review a Chinese company’s plan to purchase Smithfield Foods, Inc. (NYSE:SFD), the world’s largest pork producer.
The sale of Virginia-based Smithfield Foods, Inc. (NYSE:SFD), which has more than 46,000 employees in 25 states and four countries, to Shuanghui International Holdings for $4.7 billion would be the biggest Chinese takeover of a U.S. company.
CFIUS examines foreign investment for potential threats to national security
The companies submitted the deal in June to the Committee on Foreign Investment in the United States, or CFIUS, an executive branch panel that examines foreign investment for potential threats to national security.
A coalition of farm and food safety groups wants federal regulators to quash the proposed sale of Smithfield Foods, Inc. (NYSE:SFD) to a Chinese conglomerate in what would be the largest such takeover of a U.S. business.
Coalition members, which include the Missouri Rural Crisis Center, Food & Water Watch and the Nebraska Farmers Union, say the deal could weaken domestic food safety, cause economic damage in rural communities, and harm national security.
Smithfield transaction in extended review
Many deals are approved during an initial 30-day review, but some transactions are given a second 45-day examination.
“Smithfield and Shuanghui International remain committed to working cooperatively with CFIUS throughout the process,” Smithfield Foods, Inc. (NYSE:SFD) said in the statement confirming it had been notified of the panel’s plan for an extended review.
“The CFIUS process is confidential and Smithfield and Shuanghui International do not intend to comment further on that process while it is ongoing. Smithfield and Shuanghui International continue to expect the transaction to close in the second half of 2013,” the company added.
The Virginia-based company makes ham, sausage, bacon and other prepared meats under labels including Eckrich, Gwaltney and Armour. It has argued the deal is good for United States because it will boost pork exports, and good for China because it will help meet the country’s growing demand for pork as hundreds of millions of Chinese move into the middle class.
But some have questioned what kind of production practices Shuanghui could bring to the United States, especially after revolting images this year of thousands of rotting pig carcasses floating down the Huangpu River in Shanghai raised concerns about food safety practices in China.