How Gold Is Mined: Jun 22, 2013

Smithfield Farms, the US pork-producer and maker of hams, is getting acquired by Shuanghui International.

Smithfield stockholders will get $34 per share. The stock is up 25% in pre-market trading.

China is the world's largest producer and consumer of pork.

And China's pork industry has not been without controversy.

Recently two farmers were arrested after they sold 40 tonnes of diseased pork. Also, hundreds of dead pigs were recently found floating in a river near Shanghai.

Here's an excerpt from the press release:

SMITHFIELD, Va. and HONG KONG, May 29, 2013 (GLOBE NEWSWIRE) -- Smithfield Foods, Inc. (SFD) and Shuanghui International Holdings Limited today announced that they have entered into a definitive merger agreement that values Smithfield at approximately US$7.1 billion, including the assumption of Smithfield's net debt. Shuanghui International is the majority shareholder of Henan Shuanghui Investment & Development Co. (000895.SZ), which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalization.

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Shuanghui will acquire all of the outstanding shares of Smithfield for US$34.00 per share in cash. The purchase price represents a premium of approximately 31% over Smithfield's closing stock price on May 28, 2013, the last trading day prior to today's announcement.

"This is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture," said C. Larry Pope, president and chief executive officer of Smithfield. "We have established Smithfield as the world's leading and most trusted vertically integrated pork processor and hog producer, and are excited that Shuanghui recognizes our best-in-class operations, our outstanding food safety practices and our 46,000 hard-working and dedicated employees. It will be business as usual -- only better -- at Smithfield. We do not anticipate any changes in how we do business operationally in the United States and throughout the world. We will become part of an enterprise that shares our belief in global opportunities and our commitment to the highest standards of product safety and quality. With our shared expertise and leadership, we look forward to accelerating a global expansion strategy as part of Shuanghui."

"We are pleased to have reached this agreement with Smithfield, which represents a historic opportunity for both companies and their stakeholders," said Shuanghui chairman Wan Long. "Shuanghui is a leading pork producer in China and a pioneer in the Chinese meat processing industry with over 30 years of history. Smithfield is a leader in our industry and together we will be able to meet the growing demand in China for pork by importing high-quality meat products from the United States, while continuing to serve markets in the United States and around the world. The combination creates a company with an unmatched set of assets, products and geographic reach."

Mr. Wan continued: "The acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui's distribution network. Shuanghui will gain access to high-quality, competitively-priced and safe U.S. products, as well as Smithfield's best practices and operational expertise. We were especially attracted to Smithfield for its strong management team, leading brands and vertically integrated model. We look forward to working with Larry Pope and the many talented employees at Smithfield to grow the combined company as a leading global pork and processed meat producer with the same vision and values of providing high-quality and safe products to consumers."

Shuanghui is committed to continuing the long-term growth of Smithfield, and continuing to work with American farmers, producers and suppliers who have been critical to Smithfield's success.

Shuanghui will continue its long-term strategy and vision to become a global leader with strict adherence to the highest standards of quality control and safety compliance. Its agreement to acquire Smithfield is fully aligned with this focus. Shuanghui will maintain the excellence in Smithfield's brands and strategic priorities. Together, Shuanghui and Smithfield will enhance their competitiveness, contributing to a more secure future for the Chinese and U.S. pork industries.

Mr. Pope added, "This transaction provides Smithfield shareholders with significant and immediate cash value for their investment, and ensures that Smithfield will continue to execute on its strategic priorities while maintaining our brand excellence, community involvement, and our commitment to environmental stewardship and animal welfare. Our board of directors is pleased with the outcome of the process we followed leading to this transaction, and we unanimously believe that this combination with Shuanghui is in the best interests of the Company, our shareholders and all Smithfield stakeholders."

View the original article here

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A vendor cuts up a piece of pork in her stall at a market in Beijing, January 11, 2013.

Good morning. Here's what you need to know.

Markets in Asia were mixed in overnight trading. The Japanese Nikkei 225 advanced 0.9%, the Hong Kong Hang Seng fell 1.6%, and the Shanghai Composite rose 0.6%. European markets are in the red with the exception of Germany, which is up 1.2%. In the United States, futures point to a negative open.The EU will give France, Spain, and the Netherlands a waiver on its 3% deficit limit this year. Monitoring of fiscal progress in Italy will be relaxed substantially. In exchange, countries will be more aggressive about implementing labor reforms.Japanese retail trade rose 0.7% in April after posting a 1.5% decline in March, exceeding expectations for a 0.2% advance. Sales by large retailers, however, fell 2.3%. Economists were looking for only a 1.0% decline in large retailers' sales. German unemployment rose by 21,000 in May after increasing by 6,000 in April, more than quadrupling forecasts for a rise of 5,000. That's the fourth straight monthly rise in unemployment in the German economy, which is starting to feel the effects of the recession affecting large parts of the euro area.CBI's latest reported sales release suggested that U.K. retail sales fell at their fastest pace in 13 months in May. A net 11% of survey respondents reported a decrease in sales, up from only a net 1% last month. Economists were predicting a net 3% would report an increase in sales.In its bi-annual world outlook published today, the OECD cut its global growth forecast to 3.1% in 2013 and 4% in 2014 from 3.4% and 4.2%, respectively. In the U.S., the think tank sees 1.9% and 2.8% growth in 2013 and 2014, while in the euro zone, it predicts a 0.6% contraction this year, followed by 1.1% growth next year.The IMF trimmed its 2013 growth outlook for China to 7.75% from 8%, citing a global slowdown that would weigh on Chinese exports. However, the IMF also sees the pace of growth picking up in the second half of the year.The Wall Street Journal's Dana Mattioli and Dana Cimilluca report that Chinese meat producer Shuanghui Group is close to a deal to acquire Smithfield Foods, a major American pork and meat producer, for between $4.5 and $5 billion. The deal could be announced as soon as Wednesday morning.The Bank of Canada will announce its latest interest rate decision at 10 AM ET. This will be BoC Governor Mark Carney's final policy statement before he leaves to take the helm at the Bank of England in June. So, despite the notion that the Bank of Canada could have reasons to shift away from its tightening bias, it likely won't happen until at least the next meeting, when incoming Governor Stephen Poloz takes over.There are no economic data releases in the United States today. Looking ahead, there are a few big data releases coming up: GDP and initial jobless claims on Thursday, and personal income and spending and University of Michigan consumer confidence on Friday. Follow all of the data LIVE on Business Insider > Follow 10 Things Before the Opening Bell and never miss an update!

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