Activist hedge fund Starboard Value LP, which has fought against
Shuanghui International Holdings Ltd.'s $4.7 billion buyout of
Smithfield Foods Inc. (SFD), changed course and said it will now
vote for the tie-up after failing to come up with an alternative
bid.
In a letter to Smithfield shareholders earlier this month,
Starboard said it planned to vote against the deal with Shuanghui,
which agreed in May to buy Smithfield for $34 a share, in what
would be the biggest Chinese takeover of a U.S. company. Starboard
holds a 5.7% stake in Smithfield.
Starboard had said it was working with possible buyers to
construct an all-cash proposal from a single entity for the
acquisition of Smithfield that could be considered superior to
Shuanghui's bid.
But, in a Securities and Exchange Commission filing Friday,
Starboard said that due to a number of issues, including the
challenges of coming up with a formal counter offer by a Sept. 24
special meeting, it plans to vote in favor of the deal, "unless
another proposal emerges."
It added that while it is confident Smithfield could have
received a higher price, Starboard wasn't able to come up with an
alternative for shareholders as of now.
A representative from Smithfield wasn't immediately available
for comment.
The company's board is allowed to consider alternative bids if
they are received before shareholder approval of the proposed
merger. Also, under the terms of the Shuanghui deal, Smithfield is
allowed to delay the meeting if it hasn't received enough votes to
approve the proposed merger. The agreement also includes a Nov. 29
deadline to close the deal.
Proxy advisory firms Glass Lewis & Co. and Institutional
Shareholder Services have recommended that shareholders back the
deal.
Smithfield shares were down 20 cents at $33.97, below the offer
price.
Write to Ben Fox Rubin at ben.rubin@wsj.com
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