Banks put up $7b for PE-backed Shuanghui’s Smithfield deal – report
Bank of China and Morgan Stanley will provide $7 billion in financing for PE-backed Shuanghui International’s buyout of a US pork producer Smithfield Foods. The proposed deal, which values Smithfield at $7.1 billion including debt.
According to Reuters, Bank of China will extend a five-year term loan of $4 billion to the Chinese meat processor and syndicate the facility to other institutions. A further $3 billion term loan will come from Morgan Stanley, which also advised Shuanghui on its bid.
Shuanghui has offered $4.7 billion in cash for Smithfield. The rest of the $7.1 billion will be used to refinance the company's debt.
According to Shuanghui's 2012 annual report, CDH Investments owns 33.7% of Shuanghui International, while Goldman Sachs, New Horizon and Temasek have 5.18%, 4.15% and 2.76%, respectively. Entities controlled by Shuanghui International own 73.16% of Shenzhen-listed Henan Shuanghui.
CDH and Goldman first invested in Shuanghui in 2006, committing $250 million to the parent group, which gave them an approximately 35% indirect interest in Henan Shuanghui. The following year Temasek Holdings and New Horizon came in. Goldman was said to have divested part of its interest to CDH in 2009.
The Smithfield deal is expected to close in the second half of 2013, pending approval by numerous parties, including the US Committee on Foreign Investment in the US (CFIUS).
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