“Continental Grain congratulates Smithfield on the proposed merger with Shuanghui International,” said Paul J. Fribourg, chairman and CEO of Continental Grain. “We have been advocating for value creation and are pleased that the Smithfield board of directors and management are being proactive in realizing value for the benefit of all of its shareholders.
“In light of the announced transaction, we have elected to exit our long-term ownership position in Smithfield because we are satisfied with our investment return. We wish Smithfield and Shuanghui International the best in building a great global pork company for the future.”
Before news of the proposed sale, Continental Grain urged Smithfield to split into separate hog production, fresh pork and packaged meats, and international businesses in order to be more competitive. But Smithfield resisted, arguing that splitting the company would create supply issues and reduce vertical control over its value chain, among other arguments.
Fitch Ratings said the buyout would give Shuanghui has access to high-quality fresh pork supplies, while allowing Smithfield to keep its vertically integrated operations intact, in addition to an immediate financial return to shareholders.