Several months after removing the feed additive ractopamine from its Tar Heel processing plant in order to meet Chinese food safety standards, Smithfield has announced plans to sell the company to Shuanghui International, China’s biggest pork producer.
Smithfield’s move may have helped clear the way for Wednesday’s deal to sell the company to Shuanghui International for $4.7 billion, which if completed will be the biggest Chinese takeover of a U.S. firm, says Tim Ramey, an analyst with DA Davidson & Co.
“I think it was an enabling factor for this to happen,” Ramey said.
“We have said we will make the changes that are necessary,” Smithfield’s Chief Executive Larry Pope said on a conference call with analysts on Wednesday morning in reference to its reduced use of ractopamine. “The rest of the industry is simply going to have to make their own decisions … I think the industry will see this as sort of a lightning rod to make the change.”
The deal must be approved by the Committee on Foreign Investment in the United States before it can be finalized.
Ractopamine, used to alter pigs’ metabolism to promote lean muscle growth, is banned in the European Union, China, and Russia, but remains legal in the United States. More than half of U.S. hogs are given the additive.