Can A Huge Hog Deal Pose A National Security Risk?
Americans do love their bacon, but is that romance a national security issue?
Maybe.
This week, China's biggest pork producer announced plans to buy Virginia-based Smithfield Foods Inc. Republican Sen. Charles Grassley of Iowa wants a national security review by an interagency panel known as the Committee on Foreign Investment in the U.S., or CFIUS.
"To have a Chinese food company controlling a major U.S. meat supplier, without shareholder accountability, is a bit concerning," said Grassley, whose home state is a top pork producer.
Hong Kong-based Shuanghui International Holdings doesn't object to Grassley's demand. In fact, the company is seeking a review of its planned acquisition of Smithfield, the biggest hog and pork producer in the world.
By asking upfront for a CFIUS examination, Shuanghui may be able to build trust with U.S. officials and avoid angering Congress or the White House, said Timothy Keeler, a lawyer in Washington, D.C., who specializes in CFIUS filings.
"Technically, the review is always a voluntary process," Keeler said. But companies that try to dodge it may risk drawing even tougher congressional scrutiny, which could discourage investors and scuttle a deal. "For any significant deal, it's prudent to go forward with a CFIUS review," he said.
So what is CFIUS, and why does it have a say in the $4.72 billion cash deal that would mark the biggest-ever Chinese takeover of a U.S. company?
CFIUS may not be a household name, but it has played a significant role in shaping foreign investments in this country for nearly four decades.
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