NEW YORK – Starboard Value LP failed to find a better offer for Smithfield Foods, Inc. The hedge fund owns a 5.7 percent stake in Smithfield, and had been trying to block a proposed deal from Hong Kong-based Shuanghui International Holdings.
Starboard Value, a New York-based hedge fund, said it would vote against the proposed buyout, and was trying to assemble a counter bid. The transaction is expected to close Sept. 26 following a positive vote from Smithfield shareholders. The shareholder vote is scheduled for Sept. 24 in Richmond, Va.
“In light of the restrictions imposed by the merger agreement between the Issuer and Shuanghui, and the requirement of structuring a cash bid from a single entity, it proved challenging for the bidder group to formalize and deliver an alternative proposal prior to the special meeting scheduled for Sept. 24 at which time shareholders will vote on the proposed merger,” Starboard Value said in a filing with the Securities and Exchange Commission. “While we are confident that the Issuer could have received value in excess of that available pursuant to the proposed merger, we are not able to offer shareholders an alternative proposal at this time. Therefore, at this time, unless another proposal emerges, we plan on voting in favor of the proposed merger.”
Shuanghui, a majority shareholder of China’s largest meat-processing enterprise, offered to buy Smithfield for approximately $7.1 billion, including assumption of debt. Under the terms of the agreement, Shuanghui will acquire all of Smithfield’s outstanding shares for $34 per share in cash. But Starboard Value thought Smithfield could be worth between $44 and $55 per share.
The Committee on Foreign Investment in the United States approved the proposed acquisition on Sept. 6. Also, two proxy firms -- Toronto, Ontario-based Glass Lewis & Co. and Institutional Shareholder Services — recommended Smithfield shareholders approve the buyout. Glass Lewis & Co. said: “[W]e believe the proposed transaction is favorable and recommend that shareholders support this proposal. Accordingly, we recommend that shareholders vote FOR this proposal.”