China’s Shuanghui International has moved a step closer to buying US firm Smithfield Foods – the world’s biggest pork producer.
On Friday it confirmed it has arranged loans from Bank of China and Morgan Stanley for seven billion dollars (5.4 billion euros).
Shuanghui, which is China’s largest meat processor, is set to pay 34 dollars in cash for each Smithfield share. That is 31 percent more than the price before the takeover offer was made public, though some shareholders have said that undervalues the company.
China is the world’s largest market for pork products, and recent food contamination scandals there mean the country’s growing middle class are prepared to pay a premium for imported food.
Chinese sales would help Smithfield offset weak demand in developed markets, such as the US, and it would improve the balance of payments, offsetting Chinese imports into the US.
The Beijing and Washington governments would both have to approve the takeover.
China is likely to back the deal, but some US politicians could try to block it in the foreign investment review process.
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