The sale of one of the nation's largest meatpackers to a Chinese company is being watched closely in a southwest Minnesota community.
Shuanghui International Holdings Ltd. has agreed to buy Smithfield Foods Inc. for approximately $4.72 billion, the largest acquisition of a U.S. company by a Chinese company.
Hong Kong-based Shuanghui owns a variety of global businesses that include food, logistics and flavoring products and is the majority shareholder in China's largest meat processing enterprise. Smithfield, the world's biggest pork producer, owns brands such as Armour, Farmland and its namesake.
Smithfield Foods owns one facility in Minnesota, a meat processing plant in St. James that makes sliced luncheon meats. The plant employs over 400 people in the town of about 4,700 and produces products for Smithfield's Armour and Eckrich brands.
St. James Mayor Gary Sturm said the plant is 'vitally important' to the economic health of the southwest Minnesota community.
"It would be devastating if they were to not stay here and continue," said Sturm.
Sturm said Smithfield has played a major charitable role in St. James, donating money for a variety of local causes, including the schools, the ambulance service and the fire department.
Sturm said he's been told by Smithfield officials that operations will continue as normal at the facility in St. James.
Smithfield also operates a major meatpacking plant in Sioux Falls, S.D., less than 20 miles from Minnesota. The plant employs more than 3,400 workers and serves as a major marketing hub for hogs raised on Minnesota livestock farms.
The company says despite the sale, it will be "business as usual" at all Smithfield plants.
MORE ON THE DEAL
Shareholders of Smithfield will receive $34 per share under terms of the deal announced Wednesday -- a 31 percent premium to the Smithfield, Va., company's closing stock price of $25.97 on Tuesday.
Both companies' boards have unanimously approved the transaction, which still needs approval from Smithfield's shareholders. The transaction may also be subject to review by the U.S.'s Committee on Foreign Investment, which evaluates the potential national security effects of transactions.
Chinese investment in the U.S. is still comparatively low but has risen sharply in recent years. China has accused the U.S. of discriminating against its companies, although analysts say American firms face bigger obstructions investing in China.
The companies put the deal's total value at about $7.1 billion, including debt. Smithfield Foods has about 138.8 million outstanding shares, according to FactSet. Smithfield's stock will no longer be publicly traded once the deal closes.
Its shares surged $6.50, or 25 percent, to $32.47 in midday trading Wednesday.
Shuanghui has 13 facilities that produce more than 2.7 million tons of meat per year. Under the agreement, there will be no closures at Smithfield's facilities and locations, including its Smithfield, Va., headquarters in the historic southeastern Virginia town of about 8,100 where it was founded in 1936, the companies said.
Smithfield's existing management team will remain in place and Shuanghui also will honor the collective bargaining agreements with Smithfield workers. The company has about 46,000 employees.
(The Associated Press contributed to this report.)