Senators seek extra scrutiny of Smithfield deal
Slices of a Smithfield boneless ham are displayed in Montpelier, Vt., on June 14, 2011.(Photo: Toby Talbot, AP)
WASHINGTON — A bipartisan group of senators on Thursday urged a national security panel overseen by the U.S. Treasury Department to strengthen its review of the $4.7 billion sale of Smithfield Foods to a Chinese company by including two additional agencies to study the deal.
The 15 lawmakers, including Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., and the panel's top Republican, Thad Cochran of Mississippi, said in a letter to Treasury Secretary Jacob Lew that the Committee on Foreign Investment in the United States (CFIUS), which he heads, should include the U.S. Agriculture Department and the Food and Drug Administration in its review of the Smithfield takeover by China's Shuanghui International Holdings.
The investment committee was given the authority in 1988 to review the impact that foreign purchases of American companies have on national security. CFIUS includes members from the Departments of Justice, Homeland Security and Energy, along with five other agencies. The Smithfield deal already is being reviewed by CFIUS.
"We believe that our food supply is critical infrastructure that should be included in any reasonable person's definition of national security," the lawmakers wrote. "Further, any CFIUS review of this transaction should look beyond any direct impact on government agencies and operations to the broader issues of food security, food safety and biosecurity."
In the letter, the senators asked the committee about how other transactions would be reviewed and whether the appropriate regulators are evaluating the potential risks and proposing the proper mitigation efforts to protect the American consumer.
Larry Pope, the chief executive of Smithfield, told investors after the deal was announced May 29 that the company plans to file with CFIUS "out of an abundance of caution."
"That has a fairly speedy approval process, and we don't expect — we really don't expect much out of that either, but it is a requirement," Pope said.
In a statement Thursday, the company said it welcomed "a full review and fair consideration" by the U.S. government. "We believe the proposed combination does not present any national security concerns, is good for U.S. farmers and agriculture and will advance U.S.-China relations," Smithfield said. "We will continue to provide Congress and CFIUS with all the information requested to allow a full and timely review of the combination."
CFIUS panel is notorious for operating in secret and is not permitted by law to talk about or comment on any transaction, largely because of the sensitive information it is given to review. The panel does not reject deals outright. Instead, it tells the companies if it is going to recommend the president of the United States block their deal, which usually causes the parties to drop their proposed merger before the White House intervenes.
The purchase of Smithfield, the world's largest pork processor and hog producer, would be the largest takeover of a U.S. company by a Chinese firm if shareholders and regulators approve the deal.