July 10 (Bloomberg) -- Smithfield Foods Inc. Chief Executive Officer C. Larry Pope will face lawmakers as the proposed $4.7 billion acquisition of the hog processor by a Chinese company sparks concerns over U.S. national security.
Pope is slated to testify today before the Senate Agriculture Committee in Washington and answer questions about intellectual property, product safety and the broader effects of greater foreign ownership of U.S. agribusiness.
Shuanghui International Ltd.’s friendly deal, the largest Chinese takeover of a U.S. company, would give it control of the world’s largest pork supplier, with 460 U.S. farms and contracts with 2,100 others. Shuanghui and Smithfield voluntarily submitted the transaction, which was announced in May, for approval by the Committee on Foreign Investment in the United States, a government body that reviews the national security implications of foreign investment.
"Given the size of the target, broad tensions with China and food safety scares there, this is an unprecedented deal that could lead to increasing political storms," said Nova Daly, a consultant at Washington law firm Wiley Rein LLP who advises clients on CFIUS reviews. "It’s extremely rare for CFIUS to review a transaction involving a food-product company."
A bipartisan group of senators is urging CFIUS to include both the U.S. Department of Agriculture and the Food and Drug Administration in its review to ensure experts on food supply and food safety are part of the process.
"We believe that our food supply is critical infrastructure that should be included in any reasonable person’s definition of national security," according to a June 20 letter to Treasury Secretary Jacob Lew signed by 15 members of the Senate Agriculture Committee, including Chairwoman Debbie Stabenow, a Michigan Democrat.
Shuanghui declined to comment on security issues before today’s hearing.
"As we said previously, we welcome a full review and fair consideration of the Shuanghui-Smithfield combination from the U.S. Government," Smithfield said in an e-mailed statement. "We believe the proposed combination does not present any national security concerns, is good for U.S. farmers and agriculture and will advance U.S.-China relations."