Discuss how the Shuanghui acquisition of Smithfield Foods sheds light on the strategic reasons for choosing mergers as a growth strategy, and the factors that are influential in implementing a merger. What can you learn from the two companies’ efforts to reach an agreement on the acquisition, about choosing merger candidates, and implementing M&A strategy?
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The Shuanghui acquisition of Smithfield Foods is being driven by several strategic considerations. From the viewpoint of Smithfield foods in the US, Smithfield is operating in a mature market with little growth opportunities. From the viewpoint of Shuanghui, the Chinese firm needs growth and is also facing reputation problems. Its reputation problems, notably poor quality meat that has caused health problems in the past, could be solved by the acquisition of a reputable US company. Given a merger between the US and Chinese firms in what appears to be a win-win deal, there are, still, several factors that are influential in implementing the merger. Importantly both firms must garner support from most of their respective constituents, particularly those with power. Depending on the constituent, support will only be offered if it is in their best interest....
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