Meat marriage made in heaven
Philadelphia Inquirer: Seven years after Goldman Sachs bought a hunk of China’s Shuanghui International Holdings, the meat-processing giant has returned the favor by offering to acquire America’s largest pork producer, Smithfield Foods. If the deal survives the scrutiny of Smithfield’s shareholders and the U.S. Treasury Department, the $4.72 billion deal would be the largest takeover of a U.S. company by a Chinese firm.
In today’s globalized economy, capital knows no borders. Here in capitalism central, however, this mutually agreed-upon merger is raising hackles. Politicians have fretted about fading American power, consumers harbor fears about food safety, and Virginians worry that a historic and scenic seaport will be altered by a flood of Chinese workers.
Despite such meaty concerns, the benefits of this union outweigh the costs. Smithfield shareholders would get $4.7 billion, a 31 percent premium on the stock price. Smithfield CEO Larry Pope has said Chinese pork would not be imported, and Shuanghui has agreed to retain the American management team and to honor the bargaining rights of Smithfield employees.
While the American meat market is mature and stagnant, its Chinese counterpart is fattening rapidly as the ranks of the country’s nouveaux riches expand. In addition to the economic gains, such transpacific mergers contribute to geopolitical stability. Much as the Silk Road hastened cultural exchange, trade across the volcanic Pacific Rim can help promote peace.