SMITHFIELD, Va. (AP) -- Proxy advisory firm Institutional Shareholder Services has recommended that Smithfield shareholders vote in favor of a deal to sell the pork producer to a Chinese company.
Shuanghui International Holdings Ltd. said in May that it planned to buy Smithfield Foods Inc. in a deal valued at $7.1 billion, including debt. The recommendation of the proxy firm, which Smithfield announced Thursday, gives the deal some added support as it goes up for shareholder vote on Sept. 24.
ISS said in its report that the $34 per-share cash offer provides shareholders with a premium to the company's stand-alone trading price. It also noted that the certainty of the deal's closure has improved over the last several months, as Shuanghui secured financing and U.S. regulators approved the transaction.
The company, which is based in Smithfield, Va., is the world's largest pork producer and processor. Its sale to Shuanghui comes at a time of serious food safety problems in China, some of which have involved Shuanghui, which owns food and logistics enterprises and is the largest shareholder of China's biggest meat processor.
Some U.S. lawmakers have questioned the sale, citing food safety concerns as well as the government review process of foreign acquisitions of U.S. companies.
Smithfield has said that the buyout and China's growing demand for pork will be a boon for American agriculture and an opportunity to export to new markets such company brands as Smithfield, Armour and Farmland. Its board supports the deal.
Shares of Smithfield added 3 cents to reach $34.20 by midmorning amid a broader market dip. Its stock made a major leap after the deal was announced, and its value is up nearly 66 percent since this time last year.