BEIJING — The force behind China’s biggest takeover of an American company is a 71-year-old meat-packing entrepreneur dubbed “China’s Chief Butcher” by the media who built an empire on his country’s voracious appetite for pork.
The $4.7 billion bid for Smithfield Foods by Wan Long, chairman of Shuanghui International, is another big step up for Chinese entrepreneurs who are emerging from the shadow of state-owned corporate giants and expanding on the global stage.
Under pressure to keep economic growth strong, the new government of President Xi Jinping has promised a bigger role and lighter regulatory burden to entrepreneurs who generate China’s jobs and wealth. Still, it is unclear how far the ruling Communist Party is willing to go in making crucial changes, including curbing the dominance of state industry.
“If these Chinese entrepreneurs who are highly capable are allowed to get on and do what they do best, we’re going to see a lot more deals like this,” said Charles Maynard, senior managing director of Business Development Asia. “Despite lots of hurdles, they are increasingly able to think globally and act globally.”
“We were especially attracted to Smithfield for its strong management team, leading brands and vertically integrated model,” said Shuanghui’s Wan in the statement announcing this week’s bid.
The purchase was endorsed by Smithfield’s board but still requires approval from shareholders and U.S. regulators.
Reflecting the sensitivity of Chinese acquisitions at a time of American complaints about computer hacking and market access, the companies said they would submit the proposed deal for a U.S. government national security review.
China consumes more than half the world’s pork. That makes the tie-up with Shuanghui a possible boost to Smithfield by giving the American producer a ready-made distribution network for its Armour, John Morrell and other brands as Chinese buy more processed and packaged meat.
Shuanghui’s reputation was battered in 2011 when state television revealed its pork contained clenbuterol, a banned chemical that makes pork leaner but can be harmful to humans.
The company apologized and promised to improve quality — a process that might benefit from an infusion of know-how from Smithfield.
