The Committee on Foreign Investment in the United States has extended its review period for the proposed acquisition of Smithfield Foods, Inc. by Hong Kong -based Shuanghui International Holdings, Ltd.
CFIUS, an interagency committee, reviews proposed foreign acquisitions of US companies for potential national security concerns. Federal regulations provide for a 30-day review following notification of the proposed transaction. CFIUS can extend the review period for at least an additional 45 days, and has elected to do so to examine this proposed transaction.
"Smithfield and Shuanghui International remain committed to working cooperatively with CFIUS throughout the process," the Smithfield, Va.-based company said in a statement. "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 proposed acquisition has come under intense scrutiny. Several law firms launched investigations into Smithfield's board of directors to determine whether the board breached its fiduciary duties to stockholders by failing to shop the company before entering into the agreement. Additionally, a bipartisan group of US Senators expressed concerns about potential risks to food safety, and asked the US Department of Treasury to include the US department of Agriculture and the Food and Drug Administration in the CFIUS review process.
Smithfield announced in May it had entered into a definitive merger agreement with Shuanghui International. According to terms of the agreement, at the effective time of the merger, Smithfield shareholders will receive $34.00 per share in cash for each share of Smithfield common stock they own. In addition to the CFIUS review, the transaction is subject to certain conditions including, among others, approval by Smithfield's shareholders, the receipt of approval under certain specified foreign merger clearance laws and other customary closing conditions.
Smithfield cleared one hurdle when the proposed acquisition recently received foreign antitrust/anti-competition approvals in Mexico and Poland.
