Dive Brief:
- World's largest pork producer WH Group is seeking shareholder approval of a plan to spin off its U.S. and Mexico operations and list shares on the New York Stock Exchange.
- China-based WH Group intends to sell 20% of Smithfield shares in a plan that values the spun out company at no less than $5.38 billion. The listing and share offering would expand Smithfield's access to capital markets and give it more flexibility to make deals, WH Group said in a filing.
- Shareholders are set to vote on the proposal Dec. 6. The plan will still need approval from U.S. regulators.
Dive Insight:
Smithfield would use the proceeds from the listing to expand packaged meats capacity and further invest in infrastructure and automation, the filing disclosed. The company, the largest pork producer in the U.S., recently moved to cut 20% of its hog production as part of broader efforts to streamline operations.
WH Group is moving to spin off Smithfield amid growing concerns in Washington around China's influence on U.S. agriculture.
Chinese ownership of U.S. farmland has remained a salient issue for Republicans despite the country only making up a small fraction of foreign ownership. As Donald Trump prepares for his second term, the issue could gain even more importance: Brooke Rollins, the president-elect's choice for Agriculture Secretary, has called for tighter limits on Chinese investments in U.S. agricultural assets.
WH Group acquired Smithfield in 2013 for $4.7 billion in a deal that was known as the "largest Chinese takeover of a U.S. company." A Smithfield spinoff would enhance its "market reputation and credibility" by providing more transparency to U.S. investors, WH Group said in a filing.
However, a U.S. listing could also bring fresh pushback. Brazil-based meatpacker JBS' plan to list shares on the U.S. market has faced fierce criticism, with environmental and corporate governance advocates saying it would bring climate and investment risks.
