Quick Take Smithfield Foods agrees to be acquired by China-based meat processing company Shuanghui International. Rising demand for pork at home and livestock feed supply issues has prompted the Chinese firm to acquire Smithfield. Higher exports to China will lead to higher domestic pork prices, which will increase the input costs of U.S. based packaged meat companies. Smithfield Foods Inc., the world’s largest pork producer by sales volume, has agreed to be acquired by Shuanghui International Holdings, a privately owned meat processing company headquartered in China, for $7.1 billion including debt, valuing the company’s equity at $34 per share. Although the deal still needs to receive shareholder and regulatory approvals, we believe it can have a significant impact on the North American meat industry as it will lead to higher pork prices in the U.S. Packaged meat companies like Hillshire Brands are expected to witness higher input costs and an improvement in volume market share in the long run as a result of this deal.
Reported by Forbes.com 55 minutes ago.
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