Starboard Value, the activist hedge fund that was seeking to block Smithfield Foods’, dropped its fight on Friday, saying that it could not formalize an alternative takeover bid.
The concession by Starboard removes the last obstacle to the current deal. The meat processor cleared its most daunting hurdle earlier this month when a government panel declared that the sale to Shuanghui International â€" the biggest takeover of an American company by a Chinese counterpart â€" posed no national security issues, despite concerns raised by lawmakers.
But investors by and large did not expect the hedge fund, which owns about 1.3 percent of Smithfield’s stock, to win. Preliminary tallies of a shareholder vote on the Shuanghui transaction, which is scheduled for Sept. 24, showed relatively little opposition to the deal, people briefed on the matter have said.
Starboard said in a regulatory filing reiterated that it had garnered nonbinding “indications of interest†from potential buyers for Smithfield. While it’s unclear whom the hedge fund had been courting, at least one of the company’s rivals, the Brazilian meat processor JBS, had been considered unlikely to bid, according to a person briefed on the matter.
Starboard said in its statement that it was confident any takeover bid it assembled would have fetched more than the $34 a share that Shuanghui will pay. Still, the firm added that it was unable to overcome numerous hurdles, including restrictions embedded in Smithfield’s existing sale agreement.
“At this time, unless another proposal emerges, we plan on voting in favor of the proposed merger,†the hedge fund said its regulatory filing.
