SMITHFIELD, VA. — Hong Kong-based Shuanghui International Holdings Ltd., a majority shareholder of China’s largest meat processing enterprise, has entered an agreement to acquire Smithfield Foods, Inc. for approximately $7.1 billion, including assumption of debt.

The acquisition positions Smithfield to expand its offerings in China through Shuanghui’s distribution network. Shuanghui will acquire all of Smithfield’s outstanding shares for $34 per share in cash, which is a 31% premium to Smithfield’s closing stock price of $25.97 on May 28. Smithfield’s stock price rose nearly 28% to $33.20 before the market opened on May 29.

Upon closing of the transaction, Smithfield’s common stock will no longer be publicly traded, and the company will become a wholly owned independent subsidiary of Shuanghui. The deal is expected to close in the second half of 2013.

“This is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture,” said C. Larry Pope, president and chief executive officer of Smithfield. “We have established Smithfield as the world’s leading and most trusted vertically integrated pork processor and hog producer, and are excited that Shuanghui recognizes our best-in-class operations, our outstanding food safety practices and our 46,000 hard-working and dedicated employees. It will be business as usual — only better — at Smithfield. We do not anticipate any changes in how we do business operationally in the United States and throughout the world. We will become part of an enterprise that shares our belief in global opportunities and our commitment to the highest standards of product safety and quality. With our shared expertise and leadership, we look forward to accelerating a global expansion strategy as part of Shuanghui.”

Following the transaction, Mr. Pope will continue as president and c.e.o. of Smithfield, and Smithfield’s existing management team, as well as the management teams and workforces of its independent operating companies, will remain in place. Additionally, there will be no closures at Smithfield’s facilities and locations.

“We are pleased to have reached this agreement with Smithfield, which represents a historic opportunity for both companies and their stakeholders,” said Wan Long, chairman of Shuanghui. “Shuanghui is a leading pork producer in China and a pioneer in the Chinese meat processing industry with over 30 years of history. Smithfield is a leader in our industry and together we will be able to meet the growing demand in China for pork by importing high-quality meat products from the United States, while continuing to serve markets in the United States and around the world. The combination creates a company with an unmatched set of assets, products and geographic reach.”

The agreement provides Shuanghui with access to high-quality, competitively-priced and safe U.S. products, as well as Smithfield’s best practices and operational expertise, Mr. Long added.