Hot Senate Smithfield hearing?
A Senate hearing that matches summer's heat could be on tap tomorrow.
That's when the Senate Agriculture Committee takes a close look at the planned $4.7 billion sale of Smithfield Foods to China's Shuanghui Group. If it passes regulatory hurdles, it will be the biggest purchase of a U.S. company by a Chinese entity.
The 1:30 CDT webcast hearing brings Smithfield's CEO, C. Larry Pope, before a group of senators that has already asked for close scrutiny of the deal by the federal Committee on Foreign Investment in the United States (CFIUS). The CFIUS normally checks to see if national security is threatened by a foreign takeover, but the senators consider the nation's food supply and food safety vital, as well.
A letter to CFIUS was signed by Chairwoman Debbie Stabenow of Michigan and most of the ag committee's other Democrats as well as key Republicans, including the ranking member Thad Cochran of Mississippi, last year's ranking member Pat Roberts of Kansas, and former Agriculture Secretary Mike Johanns of Nebraska. Another GOP member signing on was Chuck Grassley of Iowa, a longtime advocate of more competition in the livestock industry. On May 29, when Smithfield announced the proposed merger, Grassley said, "to have a Chinese food company controlling a major U.S. meat supplier, without shareholder accountability, is a bit concerning."
Some farm groups, including National Farmers Union and the National Family Farm Coalition, oppose the deal. National Pork Producers Council hasn't taken a position, but several state groups support it, since it's viewed as creating a potential for more U.S. pork exports to China.
Smithfield's stock price jumped on the announcement, from $25.97 a share on May 28 to $33.35 the next day, reflecting most of the $34 a share the Chinese company is offering. August lean hog futures closed at $92.50/cwt. on May 29, 45 cents above the open. They rose for most of June, touching $99.85 on June 27. But that rally was a normal seasonal one, says Bob Short of Rosenthal Collins Group in Chicago. Floor traders think the deal may affect hog prices, he told Agriculture.com, but so far "nobody knows what to make of it."