Experts in Washington and on Wall Street had expected the deal to get the nod from the Committee on Foreign Investment in the United States, or CFIUS, an interagency, executive-branch panel that examines foreign investment for potential threats to national security.
Smithfield, which is based in Smithfield, Va., is the world’s largest producer and processor of pork. 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 raised concerns about the deal, citing food safety worries as well as questions about the government review process for foreign acquisitions of U.S. companies.
“I am deeply troubled by the decision to approve this merger,” Rep. Rosa L. DeLauro (D-Conn.) said in a statement late Friday. “Smithfield’s acquisition by Shuanghui raises a host of economic and public health issues, which I raised with regulators during this process.”
Smithfield has said the buyout and China’s growing demand for pork will be a boon for American agriculture and an opportunity to export the company’s brands — including Smithfield, Armour and Farmland — to new markets.
CFIUS, led by the Treasury Department, is made up of representatives from the Justice, Homeland Security and Defense departments and five other agencies, any of which might have particular concerns about a takeover by a given foreign buyer.
As international interest in U.S. companies has risen dramatically in recent years, CFIUS reviews have increased in number. Since 2007, CFIUS reviews of deals involving Chinese firms have tripled. Reviews involving Japanese firms have increased sevenfold.
CFIUS has blocked at least three transactions in the past four years that would have resulted in Chinese companies gaining control of assets near military facilities. Huawei Technologies and Bain Capital Partners also dropped a bid to buy computer equipment maker 3Com in 2008 in the face of opposition from CFIUS.
Shares of Smithfield rose 1.7 percent, to $34.49, in after-hours trading Friday.