CHINESE meat processor Shuanghui International Holdings Ltd has agreed to buy Smithfield Foods Inc for about US$4.7 billion in a deal that will take the world's biggest pork producer private.

Hong Kong-based Shuanghui owns a variety of global businesses that include food, logistics and flavoring products and is China's largest meat processing enterprise. Smithfield owns brands such as Armour, Farmland and its namesake.

Shareholders of Smithfield will receive US$34 per share under terms of the deal announced yesterday - a 31 percent premium to the Virginia company's closing stock price of US$25.97 on Tuesday.

Both companies' boards have unanimously approved the transaction, which still needs approval from Smithfield's shareholders. The transaction may also be subject to review by the US's Committee on Foreign Investment.

The companies put the deal's total value at about US$7.1 billion, including debt. Smithfield Foods has about 138.8 million outstanding shares, according to FactSet. Smithfield's stock will no longer be publicly traded once the deal closes.

Shuanghui has 13 facilities that produce more than 2.7 million tons of meat per year. Under the agreement, there will be no closures at Smithfield's facilities and locations, including its Virginia headquarters, the companies said.

Smithfield's existing management team will remain in place and Shuanghui also will honor the collective bargaining agreements in place with Smithfield workers. The company has about 46,000 employees.

In a statement yesterday, Smithfield CEO Larry Pope called the move a "great transaction for all Smithfield stakeholders, as well as for American farmers and US agriculture."

In recent months, Smithfield's second-largest shareholder, Continental Grain Co, has been pushing Smithfield to consider splitting itself up, saying it was time for the company to "get serious about creating shareholder value." Following a March letter from Continental Grain, Smithfield said it would review the suggestions "in due course."