This case stars Long Wan, chairman and CEO of Shuanghui International (Shuanghui), as he works through the postmerger integration of the newly acquired US-based Smithfield Foods (Smithfield). Wan must address many potential hurdles as he sought to integrate two very different companies, on two different continents, separated by a world of cultural and political differences. With its headquarters in rural Virginia and its folksy southern American history, was integration with a formerly state-owned Chinese meat processor possible? On a strictly practical note, how could he best help the two companies realize their production and capacity synergies and unlock their joint value as harmoniously as possible? Excerpt UVA-S-0330 Jul. 23, 2020 A Pig in a Poke? Shuanghui's Acquisition of Smithfield It was September 24, 2013. Long Wan, chairman and CEO of Shuanghui International (Shuanghui), China's largest pork processor, was turning 73 years old. But Wan wasn't having a birthday party. He was too busy attending to the details of a different momentous occasion: Shuanghui's USD7.08billion acquisition of US-based Smithfield Foods (Smithfield), one of the world's largest integrated pork production, processing, and packing companies. Wan had outbid other potential buyers in the international pork industry, including the better-known Brazil-based JBS S.A. and Thailand-based Charoen Pokphand Foods, by paying a 30.9% premium over Smithfield's trading price as of May 28, 2013. To fund the acquisition, Shuanghui had borrowed USD4billion from more than 10 foreign banks. (Notably, no domestic Chinese banks were among the lenders.) The acquisition had also been subject to a rigorous and lengthy approval process by the Committee on Foreign Investment in the United States (CFIUS), which had closely examined national food security concerns and considered the potential for fear on the part of US consumers about the takeover of an iconic American brand by an unknown Chinese entity. Before the deal, Wan and his team's due diligence had revealed Smithfield's existing strengths and rich promise. For the year ended December 31, 2012, Smithfield had revenues of more than USD13billion and net income of USD361million—a decline from the previous year's revenues of USD12.2billion and net income of USD521million (Exhibit1). But the company had recovered from the massive losses it had suffered as a result of the 2008–09 global economic downturn (2009 and 2010 net income was −USD198.4million and −USD101.4million, respectively), and Smithfield retained its reputation as a purveyor of reliably high-quality meat. Given China's growing appetite for pork (Exhibit2), and the long-term flatness in America's pork consumption (Exhibit3), Wan postulated that excess US production could be exported to meet the demands of the Chinese market (Exhibit4). . . .
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