Shuanghui to buy US pork producer

Under the agreement, which requires the approval of Smithfield shareholders, Shuanghui will pay $34 for each Smithfield share. The offer represents a 31 percent premium to the shares' Tuesday closing price of $25.97.

Based on Smithfield's 138.8 million shares outstanding, the cash portion of the deal is worth $4.72 billion. The companies valued the deal, including assumed debt, at $7.1 billion, meaning the value of the debt is around $2.38 billion.

With annual revenue of $13 billion and more than 46,000 employees, Smithfield, based in a small Virginia town of the same name, has facilities in 26 US states, including the world's largest slaughterhouse and meat-processing plant, in North Carolina. It also has operations in Mexico and 10 European countries.

The company's brands include Smithfield ham, Farmland bacon and Healthy Ones lunch meats. It raises some 15 million pigs a year and processes 27 million, producing more than 2.7 billion kilograms of pork.

Shuanghui, based in Henan province, owns businesses in food production, logistics and flavorings.

The deal gives Shuanghui, which already is the majority shareholder in China's largest meat-processing enterprise, a major foothold in the US food industry.

Amid a fourfold increase in the nation's annual per-capita meat consumption, China became a net importer of pork in 2008, and now is the world's largest consumer of pork.

According to the Earth Policy Institute, an environmental organization, China has imported about 400,000 metric tons of pork annually in recent years, compared with a global pork trade of less than 7 million tons.

In the past decade, Chinese pork prices have more than doubled, contributing to a slowdown in consumption, according to Dutch financial services provider Rabobank.