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ThePigSite Newsletter - 3 June 2013

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Monday 3rd June 2013.
Jackie Linden - ThePigSite Senior Editor

Jackie Linden
Senior Editor

Shuanghui-Smithfield Agreement Grabs Industry Attention

Shuanghui International of China and Smithfield Foods have agreed to a “strategic combination”. The new leading global pork enterprise will have greater access to the large and growing Chinese market and retain world-leading food safety and quality control standards.

Smithfield Foods, Inc. and Shuanghui International Holdings Limited last week 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.

With its base in the US, Smithfield Foods is the world's leading vertically integrated pork processor and hog producer.

Shuanghui International is the majority shareholder of Henan Shuanghui Investment & Development Co., which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalisation.

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.

C. Larry Pope, president and chief executive officer of Smithfield, commented that it is a great transaction for Smithfield stakeholders, American farmers and US agriculture. It will be business as usual - only better - at Smithfield, he added.

Shuanghui chairman, Wan Long, commented: "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 US products, as well as Smithfield's best practices and operational expertise. "

Commenting on the announcement, one leading market analyst said that the full impact on the US pork industry of the merger is not yet known.

Purdue Extension agricultural economist, Chris Hurt, stressed that the agreement still has to be approved in both countries and he warned that the merger is not without risk. Large corporations do not always adapt to rapidly changing global markets and there may be a negative reaction by US producers and consumers, he said. Furthermore, the differences in social and political policies could prevent the merger being finalised.

Other analysts have indicated the deal could be a significant development for US exports. Steve Meyer and Len Steiner of CME Group report this could be the largest Chinese purchase of a US company to date; one estimate puts the value of Smithfield Foods at US$7.1 billion.

They point out that Shuanghui intends to leave Smithfield’s management in place and has no plans to make changes in Smithfield’s operations, while the latter’s CEO, Larry Pope, has said that the company would not close any facilities and will leave all employee agreements in place.

Finally, Meyer and Steiner say that while Smithfield is the top US packer and pig producer, these a drop in the ocean compared to China’s pig numbers and pork production and consumption.

Turning to other news, Finnish meat group, HKScan, has acquired Swedish Nordic Genetics, giving the company exclusive rights to Nordic Genetics' NG Hampshire genetics, which form the basis for the well-known Swedish pork, Scan Piggham.

Russian meat processor, Cherkizovo Group, has reported a net loss of US$600,000 despite an eight per cent increase in sales for the first quarter of 2013 compared to the same period last year.

CEO Sergei Mikhailov, explained that it was an extremely challenging period for all meat manufacturers in Russia, with grain prices reaching historic highs in February while pork prices declined throughout the quarter.

“Even the most efficient industrial pork manufacturers, including Cherkizovo, were forced to sell hogs below production cost,” he said.


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Investigation and Characterisation of Pathogenic and Molecular Differences in Atypical Brachyspira Clinical Isolates
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Investigation of Viral Diseases of Swine in the Republic of Haiti
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Epidemiology and Control of Porcine Epidemic Diarrhoea Virus (PEDV)
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Company News

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Biomin Releases Latest Results of Mycotoxin Survey
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Market Reports

BPEX Weekly Export Bulletin - Week 22
USDA Agricultural Prices - May 2013
China Wholesale Prices - 31 May 2013
BPEX UK Pig Meat Market Update - June 2013
China Wholesale Prices - 30 May 2013
China Wholesale Prices - 30 May 2013
AHDB Pig Market Weekly - 30 May 2013
China Wholesale Prices - 29 May 2013
China Wholesale Prices - 28 May 2013

Global Pig Industry News

   United States

CME: Outlook for Livestock, Dairy and Poultry Unchanged
Hog Outlook: Shanghui Acquisition Needs Shareholder, Regulatory Approval
CME: Pork Merger Expected to Enhance US Exports to China
Report Highlights Consequences of Intensive Farming Practices
US Agricultural Trade Forecast Down but Still Record
Effects of Merger on US Pork Industry Not Yet Known, Says Hurt
NFU Concerned over COOL Retaliation
National Pork Board to Meet at World Pork Expo
US M-COOL Likely to be Discussed at World Pork Expo
CME: Corn, Soybean Plantings Behind Schedule
Focus Shifts to Soybean Planting Progress
CME: April Beef, Pork, Poultry Production Up Compared to a Year Ago
Saturated Fats Do Not Yield Better Bacon
Little Wiggle Room in Mandatory COOL
Iowa Swine Day 2013 to Address Valuable Production Topics
Hog Outlook: More Pork in Cold Storage in April Than Previous Month
Producers See Financial Gains in Learning about Ventilation Systems

   United Kingdom

Big Abattoirs Not Shouting Loud Enough
High Level Lobby Event Brings CAP Concerns to Fore
NFU Takes #buybritish Message to Millions
Imports 25p a Kilo Cheaper
Harper Adams Launches Scholarship Scheme to Support Pig Industry


Draft Pig Code of Practice for Public Comment
Survey Shows Canada Remains Free of PED
Livestock Producers Encouraged to Discuss How Farm Animals are Raised
Fusarium Resistant Wheats Expected to Benefit Prairie Pork Producers
International Rules Must be Followed for World Trade to Work Properly


Shuanghui's Acquisition Deal Win-win for China, US
US Farmers Attack Smithfield Takeover
FAO/IFIF Feed Manual Published in Arabic
OIE Adopts New Chapters on Animal Health, Welfare
Smithfield and Shuanghui Announce Pork Merger
Farm Animal Diversity Declines as Accelerating Losses Threaten Humanity
Weekly Overview: European Pig Vets Discuss Swine Flu


Chinese Pork and Poultry Problems Drive Beef Demand
China's May Inflation Forecast at 2.5 Per Cent
Local Pig Breeds in Decline in China
Tracking System Keeps Tabs on Livestock

   Russian Federation

Cherkizovo Plans to Increase Grain Harvest
Cherkizovo Reports First Quarter Loss
Pork Commentary: Russia Report


FMD NEWS: FMD Outbreak in Taiwan Affects Pigs

   Dominican Republic

Dominican Republic in Drive to Become Leading Meat, Eggs Exporter


HKScan Acquires Swedish Nordic Genetics


Calculation of Antibiotic Use on Farms


EPP: Annual Conference Buzzes with Smithfield-Shuanghui Merger News


Minister Acknowledges Parliament’s Engagement on CAP Reform

   European Union

No CAP Deal Could Delay Reform for Years
EU Pig Prices: No Movement in European Slaughter Market


Call for Sustainable Solutions to Feed the World


Livestock Growth to be Slow but Steady


OIE Reports PRRS Outbreak in Belarus


Brazil: Hog Markets


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European Symposium of Porcine Health Management 2013


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