Smithfield Foods, Inc. (NYSE:SFD)’s proposed sale to Chinese-holding company Shuanghui International Holdings Ltd is going to be reviewed through additional regulators.
A group of 15 senators have urged the Treasury Department on Thursday to include the Agriculture Department and the Food and Drug Administration to strengthen the review of the $4.7 billion sale.
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Smithfield – The World’s Largest Pork Producer
The fifteen senators raised questions about the government’s oversight of the proposed sale of the world’s largest pork producer and processor to the Chinese-holding company.
The proposed sale is already being reviewed by the Committee on Foreign Investment in the United States. The CFIUS committee’s purpose is to ensure investment by a foreign entity doesn’t pose risk to American security. The senators urged that the other two departments be included in the CFIUS process to properly address food supply and food safety issues.
Starboard Urged Smithfield to Breakup
Earlier, activist investment fund Starboard Value L.P. urged Smithfield Foods, Inc. (NYSE:SFD) to ditch its deal with Shuanghui International Holdings Ltd, as the activist investment fund considers the U.S. company worth more if the company were broken up into three divisions. Starboard Value LP proposed division of Smithfield Foods into U.S. pork production, hog farming and international sales of fresh and packaged meats.
The Chinese company inked a deal in May to buy Smithfield Foods, Inc. (NYSE:SFD) for $4.7 billion or $34 per share.
Food Supply a Matter of National Security
The letter to the Treasury Department was signed by most members of the Senate Agriculture Committee. The letter highlights growing concerns to the proposed sale to the China’s biggest meat processors.
The letter termed food supply as a ‘critical infrastructure’ and a matter of national security. The senators also indicated that the proposed sale raises new questions about future foreign acquisitions of the U.S. food companies.
The senators also urged that the review of the sale transaction be looked as a broader issue of food security, food safety and biosecurity.