A Senate committee on Thursday announced plans to hold a hearing next month on the proposed $4.7 billion takeover of America's top pork producer by a Chinese rival — the biggest takeover of a U.S. corporation by a Chinese company ever.
Virginia-based Smithfield Foods and China's Shuanghui International are fighting to keep alive the proposed deal, which is under scrutiny in Washington because of national security concerns about a Chinese company owning an important U.S. food producer.
Sen. Debbie Stabenow, Michigan Democrat, on Thursday called for a July 10 hearing so the Senate Committee on Agriculture, Nutrition and Forestry, which she chairs, can review the implications the merger would have on American food safety, security and supply. Smithfield CEO Larry Pope will testify at the hearing.
The sale is already being reviewed by the Committee on Foreign Investment in the United States, an interagency panel that focuses on national security implications that is chaired by Treasury Secretary Jack Lew.
Ms. Stabenow and 14 other senators, mostly from the agriculture committee, sent a letter to Mr. Lew asking him to bring the Agriculture Department and the Food and Drug Administration into the review process, though that hasn't happened yet.
Smithfield has said it will cooperate with Washington's oversight requests. On Thursday, the company issued a statement reasserting its intent to comply with any and all reviews.
"As we said previously, we welcome a full review and fair consideration of the Shuanghui-Smithfield combination from the U.S. government," the company said in a statement. "We believe the proposed combination does not present any national security concerns, and is good for U.S. farmers and agriculture and will advance U.S.-China relations. We will continue to provide Congress and [Committee on Foreign Investment] with all the information requested to allow a full and timely review of the combination."
But Ms. Stabenow's call for an extra layer of oversight might be overkill, according to a person privy to the Shuanghui-Smithfield deal.
The person, who asked that his name not be used, said Congress' involvement might be "a little bit misguided" but isn't likely to derail the deal. "It's not like this is knocking us on our backs or we're stunned by this or anything like that, because we were anticipating that they would get involved."
Shuanghui has indicated it is interested in buying Smithfield so it can export less-expensive and better-quality pork from the U.S. to China. But lawmakers seem concerned that this would open the door for Shuanghui to send Chinese pork that doesn't meet U.S. food safety standards to this country.
China's Commerce Ministry said Tuesday that the Smithfield transaction was unrelated to food-safety issues.
"We hope the U.S. will treat the merger case fairly and properly," it said in a statement that was its first response to questions raised by the lawmakers.
The concern that China would use Smithfield to import pork into the United States is so "ridiculous," according to a source familiar with the matter, that it's like "Saudi Arabia worrying about crappy oil being important from the United States."
Or, as Smithfield CEO Larry Pope put it: "That's sort of like exporting ice to the Eskimos. It's a dumb idea."
But Ms. Stabenow believes the hearing will help clear up concerns about food safety and supply.
"We believe that our food supply is critical infrastructure that should be included in any reasonable person's definition of national security," she wrote in the letter, though her office did not respond to a request for comment on Thursday.
"The United States has the safest, most efficient and reliable food supply in the world," she added. "It is one of our nation's great strengths, and we must ensure that it is preserved and protected."
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