Shuanghui International recently bought Smithfield Farms for $4.7 billion, but will Americans notice the change?
Instead of being locally produced, meat from local cows will become factory produced and subject to many chemical additives.
On May 29, Shuanghui International proposed acquiring Smithfield Farms for $4.7 billion, making it the biggest Chinese takeover of an American company to date. However, with Smithfield being the largest pork producer in the country, some speculate that consumers might be upset about their meat going international. While Teri Gault of The Grocery Game says they are prepared to see public boycotting or an increase in veganism, Wenoah Hauter of Food & Water Watch issued a statement saying “U.S. consumers will likely not take notice to the change.” Similar questions were asked in 2007 when JBS of Brazil acquired Chicago’s Swift & Company, but consumers didn’t seem to care then so they probably won’t care now.
While consumer grocery shopping will be unaffected by this merger, they will definitely notice a change on their plates. Hauter says that this acquisition will create more factory farms, farmer exploitation, and possible food contamination now that they have moved away from farm produce and towards factory meat. Additionally, now that Smithfield Farms will be under Chinese control, the pork will be both imported and exported if demand gets higher and environmental waste will only increase. Therefore, the meat will now be processed through vertical integration, where one company dominates production and distribution of meat to create efficiency and reduce costs, but it makes the meat subject to many chemicals. Patty Lovera of Food & Water Watch told Modern Farmer “If you’re ramping up for sending products to China, the cost, like more odors and waste, stay here while the product goes elsewhere.”
Shuanghui has fallen victim to food safety issues in the past. Two years ago, Shuanghui was selling pork meat that had high levels of clenbuterol, an illegal additive that leads to serious health risks. With the company’s history of problems, it raises even more concerns about producing meat abroad. While Smithfield and Shuanghui said that the deal was meant to increase exports of American meats to China, it seems that through this, “overseas ownership can only complicate and [create] potential future food safety problems from U.S. oversight,” Hauter concludes.
Smithfield Foods head addresses concerns over China takeover
July 10, 2013: Smithfield Foods CEO Larry Pope takes his seat on Capitol Hill in Washington, Wednesday, prior to testifying before the Senate Agriculture Committee hearing on the pending sale of Smithfield to China's largest meat producer. (AP)
RICHMOND, Va. – The head of Smithfield Foods Inc. is trying to ease concerns that the proposed takeover of the world's largest pork producer by a Chinese company would pose risks to the U.S. food supply.
CEO Larry Pope testified Wednesday at a Senate Agriculture Committee hearing on the pending deal struck in May with Shuanghui International, China's largest meat producer. The plan, which is subject to federal and shareholder approvals, is expected to close later this year. It would be the largest takeover of a U.S. company by a Chinese firm, valued at about $7.1 billion including debt.
Committee Chairwoman Debbie Stabenow, D-Mich., said the proposed purchase of the Smithfield, Va.-based company raises many questions, including the impact on food safety and security. She also said the precedent-setting transaction prompts reservations about the government review process of foreign acquisitions of U.S. companies.
"Smithfield might be the first acquisition of a major food and agricultural company, but I doubt it will be the last," said Stabenow.
She asked the Treasury Department to include both the U.S. Department of Agriculture and the Food and Drug Administration in the government's review of the sale.
"In the short-term, I know this deal looks good for our producers . One pork company alone might not be enough to affect our national security, but it's our job to be thinking about the big picture and the long-term for American food security and economic security," Stabenow added.
The proposed deal comes at a time when China has had serious food safety concerns, some of which have included Smithfield's suitor.
Pope reiterated that the takeover isn't about importing Chinese pork into the U.S. and is instead a chance to export into new markets with its brands, such as Smithfield, Armour and Farmland.
During his remarks to the committee, Pope also noted that the proposed buyout and China's growing demand for pork will be a boon for American agriculture and Smithfield's 46,000 employees in 25 states and four countries. It also owns more than 400 hog farms and has contracts with more than 2,000 family farmers across the U.S.
"There should be no noticeable impact on how we do business in America and around the world, except that we will do more of it," Pope said. "This is a wonderful opportunity for the U.S. to do what it does best, which is to produce agricultural products and ship those around the world."
He added that in turn would create jobs for American farmers to expand.
The pending deal comes as Chinese investment in U.S. firms, while still comparatively low, has risen sharply in recent years.
Daniel Slane, head of the U.S.-China Economic and Security Review Commission, told the committee that it's reasonable to expect a wave of Chinese investments into U.S. food and agriculture industry as "China becomes a global player and a fierce competitor in American markets." That panel was created by Congress to monitor bilateral economic relations and advise Congress and the executive branch on developments.
"This potential purchase is not a one off," Slane said in submitted testimony in which he warned it could be "Smithfield today" and others tomorrow or further down the road.
Why Smithfield Foods Shares Popped
What: Shares of Smithfield Foods (NYSE: SFD) were smoking today, gaining as much as 31% after a Chinese company agreed to buy the meat processor for $7.1 billion.
So what: Shuanghui International Holdings reached a deal with the pork seller, paying $34 a share for Smithfield. The stock traded as high as $33.96 today. The deal, which includes debt, also marks the largest buyout of an American company by a Chinese one. Shuanghui controls China's largest meat processor, and today's move will give it ownership of the world's largest pork producer, further strengthening its positioning in the meatpacking industry. In a statement, Shuanghui said, "The combination creates a company with an unmatched set of assets, products, and geographic reach."
Now what: Smithfield CEO Larry Pope also touted the deal, calling it a "great transaction for all Smithfield stakeholders," and saying it will not affect Smithfield's operations. The deal is on track to close in the second half of the year, but still needs to be approved by Smithfield shareholders and the Committee on Foreign Investment in the United States, which regulates acquisitions of U.S. companies. The acquisition would put pressure on competitors such as Tyson Foods and Pilgrim's Pride as Shuanghui should gain further pricing power with the move.
Stay on top of Smithfield to see if the deal goes through as expected. Add the company to your Watchlist here.
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Utah hog farm part of $7.1 billion Chinese deal
Milford • Operation raises and markets 1.2 million hogs annually.
By Dawn House The Salt Lake Tribune
This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Circle Four Farms, a massive hog operation in Milford, is part of a $7.1-billion buyout that would be the largest-ever Chinese takeover of a U.S. firm.
The southwestern Utah farm each year raises and markets 1.2 million hogs a number that is about 185 times larger than Beaver County&aposs human population.
Its parent company is the Virginia-based Smithfield Farms, whose chief executive the Senate Agriculture Committee questioned about the Chinese deal this week.
The acquisition by the Hong Kong-based meat processor Shuanghui International would give it control of the world&aposs largest pork supplier, which contracts with 2,000 U.S. producers and operates 460 farms, including Circle Four, which is Smithfield&aposs largest hog operation.
Utah officials echo concerns raised by Senate committee members that the takeover poses risks to the U.S. food supply.
"It&aposs a huge concern that we have foreign people owning and controlling a significant portion of our food supply," said Jed Christenson, marketing director for the Utah Department of Agriculture and Food. "No one is more sophisticated in efficiency and profitability than Smithfield. The Chinese not only are buying great access to pork, but also the intellectual property that comes with it."
Smithfield CEO Larry Pope has said the buyout and China&aposs growing demand for pork will be a boon for American agriculture and Smithfield&aposs 46,000 employees in 25 states (including 450 in Utah) and four countries.
"There will be no noticeable impact on how we do business in America and around the world, except that we will do more of it," Pope told the Senate committee on Wednesday. "This is a wonderful opportunity for the U.S. to do what it does best, which is to produce agricultural products and ship those around the world."
The proposed purchase is subject to federal and shareholder approvals, and could close later this year.
Circle Four is a division of the North Carolina-based Murphy-Brown LLC, which in turn is the livestock production subsidiary of Smithfield Foods. In 2012 the company reported sales of more than $13.1 billion, producing food products under about 50 brand names.
Don Butler, spokesman for Murphy-Brown, said that with the proposed transaction, "it&aposs business as usual."
The company&aposs Utah payroll is more than $17 million annually, and has helped put Beaver County in the No. 1 spot for highest farm income in the state, totaling $209 million for 2010, according to the most recent figures released by the Agriculture Department.
Dave Warner, spokesman for the Washington D.C.-based National Pork Producers Council, said the purchase creates "a huge potential for increased exports of pork to China, and that would be good for U.S. producers."
This year, China is projected to pass Canada to become the biggest buyer of U.S. agricultural goods at $22 billion, according to the U.S. Department of Agriculture.
"I don&apost think China is buying Smithfield for its pork," said Usha Haley, a global business professor at West Virginia University, but rather its valuable brand name and more advanced technology. By incorporating these into production, China could quickly improve its output and begin selling pork to nearby countries such as South Korea and Japan, the largest importer of American pork in the world.
The deal also could change the way American farmers feed hogs.
China bans the import of hogs that have been fed the growth-promoting drug ractopamine.
In February, Smithfield Foods said it was "well positioned" to meet rising demand for ractopamine-free pork, following announcements that China and Russia will require third-party certification that pork exports are ractopamine-free.
In 1992, Smithfield, Murphy Family Farms, Carrol&aposs Foods and a third North Carolina company developed Circle Four Farms at the invitation of Milford and Beaver cities and Iron County. In the early 2000s, Smithfield bought out Murphy Farms and Carrol&aposs Foods, and took over ownership of Circle Four Farms under its Murphy Brown division. The Utah facility, spread over 35 miles, is called a concentrated animal feeding operation, where animals are kept and raised in confined situations. Most of its products are shipped to California.
Local communities began complaining about noxious odors and contaminated drinking water and questioned whether the economic benefits were worth the environmental risks, according to the Michael O. Leavitt Center for Politics & Public Service at Southern Utah University. In 2001 Iron County instituted odor abatement and animal separation distance ordinances and by 2008 the public clamor diminished.
SMITHFIELD FOODS BIDS FOR BEEF, PORK FIRM
Smithfield Foods' takeover bid for its leading competitor has sparked worry among pork producers, who fear a merger of the nation's two largest hog processors might damage the potential for banner profits in the new year.
The nation's largest pork producer, Smithfield Foods announced an offer Monday to buy IBP, the top beef supplier and No. 2 pork producer, for $4.1 billion in stock and assumed debt. The offer topped efforts by an alliance of IBP managers backed by Credit Suisse First Boston, a private-equity fund.
IBP, based in Dakota Dunes, S.D., offers hundreds of packaged foods including deli meats, pizza products, soups and sauces as well as leather products for automobile, upholstery and apparel manufacturers. The company boasted sales of more than $14 billion last year and employs 49,000 people.
A successful purchase would make Smithfield Foods the largest supplier of meats in the country, giving it about 40 percent of the nation's pork production and about a third of its beef production.
The potential merger has sent a wave of concern throughout the pork industry as producers try to gauge 2001 hog prices.
Steve Cohen, spokesman for the National Pork Producers Council, said producers are expecting to send hogs to market in record numbers next year. He said certain trouble lies ahead in live-hog prices if Smithfield's merger results in plant closures.
In its bid, Smithfield Foods, which already owns 6.6 percent of IBP stock, would pay $25 in stock for each IBP share. The offer bested CSFB's cash buyout offer of $22.25 a share.
Shares of Smithfield fell $3.63, or 11 percent, to $28 in trading Monday. While the company's stock is up 17 percent for the year, Monday's decline reduced the value of its offer to about $24.60 per IBP share. IBP, down 1.1 percent from a year ago, rose $1.38, or 6.6 percent, to $22.25.
Pork producers aren't alone in their concern about the merger. Consumers will also be watching the potential blending of the nation's No. 1 and No. 2 pork producers.
Iowa Attorney General Tom Miller said any potential for smaller profits among pork producers could result in higher pork prices at the checkout line.
Beef producers, however, are taking a wait-and- see attitude. While IBP may be the largest beef producer in the nation, Smithfield Foods doesn't own any beef operations. The buyout wouldn't affect the concentration of ownership in the beef industry, producer said.
"We're still trying to gather the information," said Alisa Harrison of the National Cattlemen's Beef Association. "We're just trying to get the word if there would be a change in management and strategic direction."
Harrison said the beef industry has already embraced a company producing both pork and beef, noting that IBP is both No. 1 in beef production and No. 2 in pork production.
"It's certainly competitive," she said. "But we've learned to live with that. And beef demand is on its sixth straight quarter increase for the first time in 20 years. We feel very good about where the beef industry is going."
The buyout offer comes after a decade of aggressive purchases by Smithfield Foods in the international meat market and the hog farm market. In 1998 and 1999, the company bought meat-processing plants in Canada, France, Poland and Mexico. More recently, the company acquired two major hog-farm companies, Carroll's Foods of Warsaw, N.C., and Murphy Farms of Rose Hill, N.C.
Last month, C. Larry Pope, vice president and chief financial officer for Smithfield Foods, said the company has made strides to become a hog raiser, not just a hog processor. The move, Pope said, is designed to stabilize profits through both the good and bad years.
But the latest buyout attempt comes as some surprise. When Smithfield Foods purchased IBP stock last August, it reported that it had no intention of taking over the company. Chairman Joseph Luter III reiterated that sentiment during a shareholders' meeting in Richmond, saying the company had no acquisitions on the horizon.
Luter said the addition of beef to the company stables would enable Smithfield Foods to better serve the nation's food retailers and customers for quality meat products. He said the farming community nationwide would benefit from the stability a combined company would provide.
"By adding beef to our product portfolio, this combination will enable Smithfield Foods to better serve the increasingly demanding needs of the nation's leading food retailers," Luter said, "and to satisfy consumers' growing appetite for value-added, branded meat products."
Chronology of Smithfield Foods' acquisitions
Smithfield Foods' history of acquiring meat- packing plants and farms stretches back to the 1981 purchase of its longtime rival and neighbor, Gwaltney Foods. But the company's most aggressive efforts to expand have come during the past 10 years with no fewer than 11 key acquisitions in markets for live hogs, processed meats and fresh pork.
* September 1992: Smithfield Foods takes over the Valleydale processed meats brand name. Valleydale had been famous for its pork products and television ads featuring marching, drum-beating pigs.
* December 1995: Smithfield Foods completes a $58 million acquisition of John Morrell & Co., a move that doubled the company's size at the time and placed new stakes in the Midwest. The move also propelled Smithfield Foods into the No. 2 pork producer slot.
* September 1996: Smithfield Foods acquires the meats division of the Tampa-based Lykes Bros. Inc.
* July 1998: Smithfield Foods buys North Side Foods Corp., a producer of pre-cooked pork products, including the sausage for the McDonald's fast-food chain.
* December 1997: Smithfield Foods announces efforts to acquire the Schneider Corp., Canada's leading producer of processed meats. The deal becomes the company's first international purchase.
* September 1998: Smithfield Foods purchases Societe Bretonne de Salaisons, a France-based private-label processed meats company.
* February 1999: Smithfield Foods announces plans to buy the Warsaw, N.C.-based Carroll's Foods in a deal worth $500 million. The deal combined the two largest pork producers at the time.
* April 1999: Smithfield purchases Animex, Poland's largest producer of meat and poultry.
* August 1999: Smithfield Foods purchases its second France-based meat company with the acquisition of Societe Financiere de Gestion et de Participation S.A.
* September 1999: Smithfield Foods offers to buy The Pork Group Inc., Tyson's pork-production operations, for about $80 million in stock. The operation produces about 1.8 million hogs each year. The company also seals a deal with Agroindustrial del Noroeste, a Mexican pork-processing plant.
* December 1999: The Tyson deal crumbles. Smithfield officials said the talks were dropped because "certain inherent operational characteristics" of Tyson's Pork Group did not fit into Smithfield's "expectations or long-term plans."
* January: Smithfield Foods acquires Murphy Family Farms as part of company effort to control pork production from the farm to the processing plant. The purchase, a transaction that involved Smithfield Foods issuing 11.1 million shares of stock and assuming $203 million of debt, gave Smithfield Foods about 12 million market hogs each year.
* August: Smithfield Foods purchases 6.6 percent of its leading competitor, IBP Inc. Smithfield Foods reports no intention of a takeover attempt.
* September: Smithfield Foods announces the addition of 176 meatpacking jobs at Smithfield Packing, a boost of about 10 percent of the plant's workforce.
* Nov. 13: Smithfield Foods reveals $4.1 billion offer for IBP. A successful buyout would make Smithfield Foods the largest producer of both pork and beef in the nation.
Smithfield Foods shareholders approve sale to Chinese company
RICHMOND—By a wide margin Smithfield Foods investors accepted a buyout Tuesday morning ensuring that in two days one of Hampton Roads' only Fortune 500 companies will become a subsidiary of a giant Chinese pork company.
The votes of shareholders were tallied at a brief meeting at a law office conference room here, sealing the $4.7 billion deal. More than 96 percent of the votes cast were in favor of the acquisition by Shuanghui International, which will pay investors $34 for each share of stock they own, as specified in an acquisition agreement announced in late May.
Before the vote, Smithfield's chief executive C. Larry Pope warned Smithfield Foods shareholders that he might choke up.
Businesses inevitably evolve over time, he said, but "it doesn't mean those changes don't come without some emotion."
Pope, who has been the chief cheerleader for the deal, said it will breathe life into a company and a domestic pork industry that have been in the doldrums.
"Our industry has been stagnant for the last couple years," he told investors.
He has said in the past that the deal would give Smithfield's American grown and processed products entry into China's massive pork market.
"It's good for the business, it's good for the industry, and some would say it's good for me financially," Pope said, referencing the nearly $46.6 million he is set to receive through the acquisition.
The compensation package for Pope and other executives is worth more than $100 million and has opened them up to some criticism for being too inclined to favor the offer. But the package also includes significant incentives for them to stay on at the new company.
A vote was also taken on the compensation, as required in some cases under a so-called "say on golden parachutes" provision in the Dodd-Frank financial reform law passed in 2011. That vote was considerably closer than the vote on the buyout, passing with 56 percent of the votes cast.
Pope did not grant members of the media in attendance interviews following the vote. However a few investors and meeting attendees did spoke with reporters.
Travers Mayhew of Newport News, who called himself a minor investor, said he was also among the minority of shareholders who opposed the deal.
"I'm not worried about food safety," Mayhew said, referencing the concerns raised by some advocacy groups and lawmakers that the deal creates an entry point for lax Chinese safety standards to the U.S. food supply.
Rather he said he was uncomfortable with the notion of foreign ownership of a local company. "I didn't like seeing it go overseas," he said.
Maynard Gwaltney, Smithfield's fleet manager, said he'd love for Smithfield to stay the way it is, but a change was needed to boost the company's long-term profits.
"It's a global market," said Maynard Gwaltney, a Smithfield resident with a hog lapel pin on his jacket. "If you're going to exist and do well in business you have to be global."
"It hurts my heart, but it's the right thing to do to make the company more profitable," Gwaltney said.
According to a Smithfield news release the deal will be completed by Thursday.
Smithfield owns 400 hog farms, and contracts with 2,000 other hog farmers. The company employs more than 46,000 people internationally and 3,700 in Virginia.
Under the leadership of Joseph W. Luter III the company adopted a vertical integration strategy, control its product from the farm to the slaughter house to the grocery store aisle.
Pope had resisted calls from an activist investor before the Shuanghui announcement, to split off the company's hog farm and international divisions to allow shareholders to get better returns on its comparatively more profitable packaged meat business. After the deal's announcement another investor, Starboard Value, had called for the company to be split up and sold piecemeal.
Instead it will maintain its structure, according to executives.
Shuanghui and Smithfield officials have said American employees will continue to do their jobs and facilities will stay open. If anything, they say, the company will expand operations.
The United Food & Commercial Workers, which represents more than 16,000 Smithfield workers, came out in favor of the deal, noting that it would not affect union-negotiated contracts.
Debate swirls around deal
The Smithfield-Shuanghui deal has generated more attention and controversy than other foreign acquisitions of U.S. companies.
That's in part because of its size at $4.7 billion and part because Shuanghui's home country has a poor track record when it comes to food safety generally and to hog farming and processing specifically.
Pope and Shuanghui executives have said forcefully that the acquisition will translate to increased U.S. pork exports to China but not the other way around.
However some critics are skeptical of that promise.
"U.S. consumers should know that the politics of trade are trumping common sense when it comes to our food," said Wenonah Hauter executive director of Food & Water Watch, a Washington, D.C.-based consumer advocacy group.
Hauter also noted a recent U.S. Department of Agriculture decision allows for the import of poultry grown in other countries but processed at Chinese plants.
"Our regulators shouldn't be making it easier for the chicken breasts or pork chops on our plates to be born, raised and slaughtered in China," Hauter said.
Smithfield acquisition of Pini Polonia gets green light
WARSAW, Poland – Poland’s Office of Competition and Consumer Protection (UOKiK) gave final approval of Smithfield Foods Inc.’s acquisition of Polish meat processor Pini Polonia a year after Smithfield and Pini Capital Group agreed to the deal.
The transaction initially was referred to the European Commission’s antitrust unit, which decided that the acquisition would impact only the Polish market for meat.
“The analysis of the effects of the concentration has shown that it will not restrict competition,” the UOKiK said in a statement. “Smithfield Foods will have to compete with other slaughterhouses, therefore there is no reason to worry that the entrepreneurs will lower the purchase prices of livestock, especially in view of the fact that prices on the domestic market are transparent. In the opinion of the Office, the concentration will not affect the access of small and medium market participants to large meat recipients (e.g. retail chains).”
Smithfield owns the Animex Group and nine meat production and processing plants, including three slaughterhouses in Poland, according to the agency.
Pini Capital Group is active in Poland, Italy and Hungary. The company operates a slaughterhouse in Kutno, Poland, in addition to acting as a supplier to retail outlets and further processing plants.
Home of famous Va. hams ponders Chinese buyout
1 of 5 Hams and other memorabilia are displayed at a restaurant in Smithfield, Va., home of the famous hams. Residents have mixed reactions about Smithfield Foods agreeing to be bought by a Chinese firm for $4.72 billion. Amanda Lucier/MBI Show More Show Less
2 of 5 In this May 29, 2013 photo, a pig statue sits outside the offices of Smithfield Foods in Smithfield, Va. Smithfield Foods has agreed to be bought by Shuanghui International Holdings for about $4.72 billion. Residents in this southeastern Virginia town have mixed reactions to the idea that the maker of their famous cured hams may soon be owned by a Chinese company. (AP Photo/The Virginian-Pilot, Amanda Lucier) Amanda Lucier/MBI Show More Show Less
3 of 5 In this May 29, 2013 photo, a truck waits outside the gates of Smithfield Foods in Smithfield, Va. Smithfield Foods has agreed to be bought by Shuanghui International Holdings for about $4.72 billion. Residents in the southeastern Virginia town have mixed reactions to the idea that the maker of their famous cured hams may soon be owned by a Chinese company. (AP Photo/The Virginian-Pilot, Amanda Lucier) Amanda Lucier/MBI Show More Show Less
4 of 5 In this May 29, 2013 photo, a truck leaves Smithfield Foods in Smithfield, Va. Smithfield Foods has agreed to be bought by Shuanghui International Holdings for about $4.72 billion. Residents in this southeastern Virginia town have mixed reactions to the idea that the maker of their famous cured hams may soon be owned by a Chinese company. (AP Photo/The Virginian-Pilot, Amanda Lucier) Amanda Lucier/MBI Show More Show Less
5 of 5 In this May 29, 2013 photo, workers approach the gates of of Smithfield Foods in Smithfield, Va. Smithfield Foods has agreed to be bought by Shuanghui International Holdings for about $4.72 billion. Residents in this southeastern Virginia town have mixed reactions to the idea that the maker of their famous cured hams may soon be owned by a Chinese company. (AP Photo/The Virginian-Pilot, Amanda Lucier) Amanda Lucier/MBI Show More Show Less
SMITHFIELD, Va. - You can't go far in this historic southeastern Virginia town without seeing a pig.
A herd of life-size swine statues lines its downtown, an ornament of a piglet wearing a bandanna adorns a front lawn, hams hang in storefronts and a pickup truck flaunts the license plate "PIG TIME."
The home of the world's largest pork producer and maker of famous Smithfield hams, founded in 1936, is divided in its reaction to news that the company agreed to be bought by a Chinese company.
Smithfield Foods Inc. agreed to a $4.72 billion offer from Shuanghui International Holdings Ltd., the majority shareholder in China's largest meat processor. The deal, which would be the largest takeover of a U.S. company by a Chinese firm, still faces a federal regulatory review and shareholder approval.
Some locals are shocked that "China would own our Smithfield," said Carolyn Burke, a longtime resident who owns the eatery.
"It's Smithfield ham, it's not China ham."
And she's right: Pork produced here for more than 300 years became so popular that many places in the 1930s tried to pass off their ham as Smithfield ham, which led to branding each ham so customers knew it was authentic.
As important as the pork itself is Smithfield Foods, which employs about 3,800 people in Virginia. In its most recent fiscal year, it brought in sales of more than $13 billion and made a profit of $361 million.
With its namesake and well-being on the line, Smithfield native and Mayor T. Carter Williams, 71, hopes the pending sale doesn't compromise the town's identity.
"They say that everything's going to stay the same, and we all just hope that it does," he said.
Pork producers such as Smithfield have been caught in a tug of war with consumers. The company needs to raise prices to offset rising commodity costs, namely the corn it uses for feed. But consumers are still extremely sensitive to price changes. By raising prices, Smithfield risks cutting into its sales should consumers cut back or buy cheaper meats, such as chicken. In 2009, Smithfield Foods posted its first annual loss since 1975, and again in 2010, but has since rebounded. And one of its largest shareholders had been pushing Smithfield to consider splitting itself up in recent months.
"Somebody's gotta own it," Barnes said. "It's just money. It doesn't bother me as long as it doesn't change our philosophy, our life, our politics (and) it doesn't shut down places."
Longtime resident Sheila Gwaltney agreed: "When you think about it, that should be very good economically for the company . and what's good for the company is good for us."
There is at least one drawback that residents note: They'll soon be unable to own Smithfield stock - a tangible piece of the company named after the town that pork built.
Is Smithfield Foods owned by China?
Smithfield Foods was founded in Virginia in 1936,ਊnd its pork products are ubiquitous in U.S. supermarkets, but the company was actually bought by WH Group, formerly known as Shuanghui International, for $4.7 billion in 2013.
Smithfield became a subsidiary of the publicly traded Chinese corporationꂯter theommittee on Foreign Investment in the United States (CFIUS) said the acquisition would not endanger national security.
But critics of the deal pointed out the Chinese government&aposs heavy involvement if not outright control of the country&aposs industries.
𠇏ood security is national security,” Michigan Sen. Debbie Stabenow told PBS NewsHour in 2014. 𠇊nd I can’t imagine that the American people will feel comfortable if they wake up someday and find that half of our food processors are owned by China.ਊnd I think there are some very, very tough questions that need to be answered.”
The Smithfield Foods Inc. logo is displayed on boxes at the company's pork processing facility in Milan, Missouri, April 12, 2017. (Daniel Acker/Bloomberg via Getty Images)
Smithfield&aposs CEO at the time, C. Larry Pope, said the company would continue with "business as usual — only better."
"We have established Smithfield as the world&aposs leading and most trusted vertically integrated pork processor and hog producer, and are excited that Shuanghui recognizes our best-in-class operations, our outstanding food safety practices and our 46,000 hard-working and dedicated employees," Smithfield&aposs CEO at the time, C. Larry Pope, said in a statement. "We do not anticipate any changes in how we do business operationally in the United States and throughout the world."
WH Group is headquartered in Hong Kong. The company says its main business is packaged meats along with fresh pork and hog production. It owns both Smithfield, the biggest U.S. pork food company, and Henan Shuanghui Investment & Development Co., Asia&aposs biggest meat processing company.
In this April 14, 2020, photo, a package of Smithfield Foods breakfast sausage sits in a shopping cart outside of a local grocery story, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)
WH Group recorded sales of more than $24.1illion in 2019, according to its website. Its CEO, Wan Long, is one of China&aposs richest men, with a fortune of more than $1.8 billion according to Forbes.
These days, Smithfield has been in the headlines after its CEO warned of a meat shortage when the company&aposs Sioux Falls, South Dakota, facility was one of the first to temporarily close because of a coronavirus outbreak.
"What&aposs happened in this pandemic is we still have that bounty of livestock," CEO Ken Sullivan told "Mornings with Maria" in April. "The linchpin in the middle is the harvest facilities, and there&aposs a relatively small number . of plants that actually harvest all those animals and turn it into food."