The largest ever acquisition of a US corporation by a Chinese company was littered with complex regulatory hurdles that needed to be overcome to realise the completion of Shuanghui International Holdings’ US$7.1 billion purchase of Smithfield Foods, one expert involved in the deal has said.
“Of the various regulatory clearances, CFIUS [the Committee on Foreign Investment in the United States] was definitely the most discussed and keenly watched by politicians and the general public, both within and outside the US,” Vivian Lam, a Hong Kong partner at Paul Hastings, told China Business Law Journal. “This deal will change people’s perceptions and show them that corporate America is open to Chinese investments.”
Paul Hastings advised Shuanghui International, a Hong Kong-based holding company that owns the majority stake of the compamy that has become China’s largest meat processing enterprise. Smithfield Foods is the largest pork producer and processor in the US. Shuanghui International’s acquisition of Smithfield closed on 26 September.
“The perception in the past was that the US did not welcome Chinese investments,” she said. “There had been some successful cases of Chinese acquisitions, but also many recent ones that failed to pass clearance.”
“The Shuanghui-Smithfield merger was not cleared in the first 30 days and entered the second 45-day review period. The final approval turned a new chapter for private investments by Chinese companies into the US.”
The Paul Hastings global team was led by Raymond Li, the firm’s chair of Greater China. Partners Carl Sanchez, Michael Chernick and Scott Flicker led the Paul Hastings’ US team. The firm’s Hong Kong teams were led by Lam.
“The rising middle class in China is demanding high-quality food and other products, and Chinese companies are encouraged to make investments offshore to acquire leading management expertise, valuable knowhow, best practices and reputable brands,” Lam said.
“The merger will allow Shuanghui to make use of its vast distribution network in China to bring Smithfield’s quality products to the consumers in China,” she added.