Haley and Slane asserted that Shuanghui’s corporate leadership is closely tied to China’s governing Communist Party and enjoys access to state financing. Shuanghui is paying a 30 percent premium over Smithfield’s stock price, while assuming roughly $2 billion in Smithfield debt. The panel of experts differed on whether a U.S. company would be allowed to consummate the purchase of a Chinese firm on the scale of Smithfield. Slane responded, “absolutely not,” and forecast that a Shuanghui takeover would “undercut U.S. products overseas” and trigger “a wave of Chinese investment” here. AT THE TROUGH: The purchase of Smithfield Foods could open the gates to more takeovers by China. WASHINGTON – A Chinese takeover of Virginia-based Smithfield Foods is a precedent-setting sale with massive market implications, a Senate committee was told Wednesday. While a panel of economists dueled over the pros and cons of the $5.1 billion deal, Agriculture Committee Chairwoman Debbie Stabenow said federal agencies, including the USDA and the Food and Drug Administration, need to take a hard look at the sale. “Food security is national security,” the Michigan Democrat said. “We need to take the long view.” Smithfield President Larry Pope called the purchase “a partnership for growth.” “There will be no noticeable impact on U.S. operations – except that we plan to do more of it,” he vowed. But Daniel Slane, commissioner of the U.S.-China Economic and Security Review Commission, warned that Shuanghui Holdings International would “import a radically different system” into America’s food chain. “China wants control over the price of pork. They want technology in hog genetics and industrial-scale production – things that U.S. taxpayers funded through USDA grants,” Slane said. Usha Haley, director of West Virginia University’s Center for Global Business and Strategy, declared that “politics trumps economics in China.” Warning that the “risks outweigh the benefits,” she predicted that “privatization (under Chinese ownership) will affect food safety.” China is the world’s No. 1 pork consumer; Smithfield is the globe’s No. 1 pork producer. Matthew Slaughter, a Dartmouth College business professor, testified that global acquisitions “are an everyday reality” and said Americans benefit from such purchases. He said U.S. affiliates of foreign companies account for 18 percent of U.S. exports. Slaughter added that Shuanghui is “not a state-owned company,” but partially controlled by the Wall Street investment house, Goldman Sachs. Haley and Slane asserted that Shuanghui’s corporate leadership is closely tied to China’s governing Communist Party and enjoys access to state financing. Shuanghui is paying a 30 percent premium over Smithfield’s stock price, while assuming roughly $2 billion in Smithfield debt. The panel of experts differed on whether a U.S. company would be allowed to consummate the purchase of a Chinese firm on the scale of Smithfield. Slane responded, “absolutely not,” and forecast that a Shuanghui takeover would “undercut U.S. products overseas” and trigger “a wave of Chinese investment” here. “State capital ideology poses a threat,” he said. While Smithfield’s Pope asserted that U.S. producers support the sale, more than a dozen consumer, environmental and agricultural groups issued a statement in opposition. “The cross-border acquisition undermines the safety and security of the U.S. food supply, threatens the environment and economy of rural communities, provides significant taxpayer-financed technology and intellectual property to foreign competitors and will raise the cost of food for American consumers,” said the coalition. The Committee on Foreign Investment in the United States must approve the sale, and senators from both parties joined Stabenow in urging further review. “We need to make sure that China’s desire for food security doesn’t come at the expense of the United States,” said Sen. John Thune, R-S.D.
Posted on: Thu, 11 Jul 2013 17:27:49 +0000
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