Smithfield-Shuanghui Deal Recommended By Proxy Firm ISS

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The transaction of Smithfield Foods, Inc. (NYSE:SFD) with Shuanghui International Holdings Limited was recommended by Institutional Shareholder Services (ISS), an independent voting and corporate governance advisory firm.

Smithfield-Shuanghui Deal Recommended By Proxy Firm ISS

The press statement of Smithfield Food

According to the press statement of Smithfield Foods, Inc. (NYSE:SFD), ISS encouraged shareholders to approve Shuanghui’s proposal to acquire the largest pork processor and hog producer in the United States for $4.72 billion, or $34 per share, on September 24.

Smithfield Foods, Inc. (NYSE:SFD) quoted the statement of the ISS, indicating that Shuanghui’s $34 per share proposal provides shareholders with a reasonable and certain premium to the standalone trading price of the company.

The ISS also mentioned in its recommendation that the chances of the closure of the transaction improved considerably because Shuanghui secured committed financing. In addition, the proxy firm noted that the deal already received regulatory approval under the Hart-Scott Rodino Act (HSR) of the FTC and the Committee on Foreign Investment of the United States (CFIUS).

“Given the board’s eagerness to consummate the merger before year end, the receipt of the consideration in the near future appears increasingly certain. ISS recommends that clients vote FOR the merger with Shuanghui in light of the considerable premium offered by the deal and the certainty of value provided by the all-cash consideration,” according to the ISS.

Larry Poe, president and CEO of Smithfield Foods, Inc. (NYSE:SFD) said, “ISS recognizes the significant value that the proposed combination will deliver to all Smithfield shareholders. We look forward to completing this transaction and beginning a new chapter in Smithfield’s long and successful history.”  Poe also encouraged the shareholders of the company to approve the merger agreement.

Shuanghui’s deal

Earlier this month, Starboard Value L.P. announced that it is working with a group of buyers to offer alternative higher prices to acquire the U.S. pork processor and hog producer. The hedge fund said it needs additional time to complete its effort, and urged its fellow shareholders to vote against Shuanghui’s deal. According to the hedge fund, voting against the deal will not impair the eventual approval and consummation agreement between Smithfield Foods, Inc. (NYSE:SFD) and Shuanghui, because the terms of the agreement provide flexibility.

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