China's largest pork producer Shuanghui International Holdings Ltd has agreed to acquire Smithfield Foods Inc. for USD$4.7 billion.
With the purchase Shuanghui aims to supply China's growing consumption of pork, as well as increasing the saftey of the country's food supply.
Based in Henan province in central China, Shuanghui is a vertically integrated producer of meat products.
The company is China's leading pork producer with an annual slaughter capacity of over 30 million pigs.
In one year the company processes approximately 30 million pigs, 300 thousand cattle, 600 thousand tonnes of chicken, 50 thousand tonnes of eggs, and 50 thousand tonnes of soy protein each year.
The feed processing arm of the company, Henan Shanghui Industry Group Co., Ltd, operates one feed mill in Luohe, Henan Province.
Constructed at a cost of CNY 57 million, the feed mill has an operating capacity of 150,000 tonnes of animal feed per annum. Feed machinery for the production line was imported from Italy. While feed formulation technology was based on Japanese, Korean and Danish knowledge.
The Smithfield takeover is valued at approximately USD$7.1 billion including debt, which would make it the largest Chinese takeover of a U.S. company.
Smithfield's livestock unit is the world's largest hog producer, bringing about 15.8 million pigs to the market every year. It owns 460 farms and has contracts with 2,100 others across 12 US states.
The company is also vertically integrated, operating 11 feed mills for feed production in the U.S. under its Murphy-Brown arm, and 2 feed mills under its Polish operations, Animex.
