HONG KONG – Shuanghui International Holdings Ltd. is planning an IPO after completing its buyout of Smithfield Foods Inc., Reuters reported. The proposed IPO is estimated at $4 billion.
The rationale behind listing the combined company is the higher value placed on the stock in Hong Kong compared to the US or other stock exchanges, according to Reuters. Shuanghui could use the money from the IPO to pay down its debt. A Hong Kong listing also would mean more value to the company's private-equity investors when they decide to sell their shares.
Smithfield has passed the required waiting period mandated under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR). But the transaction remains subject to other conditions, including approval by Smithfield's shareholders, the receipt of approval under certain specified other foreign merger clearance laws, review by The Committee on Foreign Investment in the United States and other customary closing conditions.
Smithfield shareholders will receive $34.00 per share in cash for each share of Smithfield common stock they own at the effective time of the merger. Upon closing of the transaction, Smithfield’s common stock will no longer be publicly traded, and the company will become a wholly owned independent subsidiary of Shuanghui. The deal is expected to close in the second half of 2013.