This little piggy goes to China.
Just days before a shareholder vote, hedge fund manager Jeff Smith threw in the towel on his attempt to find buyers willing to pay more for Smithfield Foods — the world’s No. 1 hog and pork producer — than the $4.7 billion bid by Shuanghui International Holdings.
Smith’s Starboard Value fund had objected to the $34-a-share deal and looked to delay the vote — but after failing to rustle up a better offer, it said Friday that it will drop its opposition and vote to approve the deal for the pig (left) producer.
If a majority of Smithfield shareholders vote on Sept. 24 for the deal, it will be the largest acquisition of a US company by a Chinese company.
“In light of the restrictions imposed by the merger agreement between [Smithfield] and Shuanghui, and the requirement of structuring a cash bid from a single entity, it proved challenging for the bidder group to formalize and deliver an alternative proposal prior to the special meeting,” Starboard said in its filing with the Securities and Exchange Commission.
“While we are confident that [Smithfield] could have received value in excess of that available … we are not able to offer shareholders an alternative proposal at this time,” Starboard said in the filing.
Smithfield’s stock fell slightly on the news — slipping 0.6 percent to close Friday at $33.98, just below the offer price.
The deal between the companies, announced in May, received clearance from the US government earlier this month.
Smith’s New York hedge fund, which owns 5.7 percent of Smithfield’s stock, was betting that Smithfield, which raises pigs as well as processing sausages, could sell for more if sold in parts rather than as a whole.
Indeed, Starboard said the total of the bids it had received from various unidentified bidders came in at a price substantially in excess of the $34-per-share price that Shuanghui was offering — but it is unable to pull it off in the time available.
Smithfield said in July that it had looked at prices for a broken-up company and that it determined doing so wasn’t in the best interests of shareholders.
Smith would have faced an uphill battle to block the deal next week, especially without a viable alternative to tantalize investors.
Indeed, shareholder advisory firms ISS and Glass Lewis recommended that shareholders support the merger, despite Starboard’s objections.