Shuanghui agrees $4.7bn deal for Smithfield Foods Shuanghui International has launched an agreed $4.7bn cash offer for Smithfield Foods, the largest US pork producer, as China attempts to feed the increasing appetite of its growing middle classes. The Chinese meat producer said on Wednesday the acquisition would allow it to supply more pork to China while maintaining world-leading food safety standards. Shuanghui is paying $4.7bn for Smithfield's equity and will also take on the US group's debt, which brings the total value of the proposed deal to about $7bn. If completed, it will be the biggest takeover to date of a US company by a Chinese entity. The $34-a-share offer price represents a 31 per cent premium to Smithfield's closing share price on Tuesday of $25.97. The shares jumped 33 per cent in pre-trading in New York on Wednesday. China's appetite for meat is growing as consumers become wealthier and adopt more developed-world eating habits. However, the strain on the less-developed domestic food production industry has taken its toll, leading to food safety scandals and recently a sea of dead pigs floating in a river near Shanghai. Wan Long, chairman of Shineway, as the Chinese company is also sometimes known, said the deal had been agreed by both boards. "Smithfield is a leader in our industry and together we will be able to meet the growing demand in China for pork by importing high-quality meat products from the US, while continuing to serve markets in the US and around the world," he said. This is a very smart move. They [Shuanghui] want to capitalise on the trust that Chinese consumers place in American food safety standards Shaun Rein, China Market Research, Shanghai Larry Pope, Smithfield chief executive, said: "We have established Smithfield as the world's leading and most trusted vertically integrated pork processor and hog producer, and are excited that Shuanghui recognises our best-in-class operations, our outstanding food safety practices and our 46,000 hard-working and dedicated employees." But Shuanghui's reputation in China has been hit hard in recent years by allegations made by state television that the company used an illegal additive to rear pigs. A report two years ago claimed that some farms owned by Henan Shuanghui used clenbuterol hydrochloride, a toxic additive, to feed pigs in order to induce the growth of lean meat. They [Shuanghui] want to capitalise on the trust that Chinese consumers place in American food safety standards," said Shaun Rein of China Market Research in Shanghai. In its most recent results, Smithfield reported net income of $81.5m on sales of $3.6bn, with strong contributions from its packaged meats division and its international operations. Barclays is advising Smithfield while Morgan Stanley is advising Shuanghui on the deal . The transaction, which is expected to close in the second half of 2013, is subject to approval by the Committee on Foreign Investment in the US and by shareholders.