[Type text] [Type text] [Type text] Team Apples Final Paper 1 Team Apples Final Paper Rivier University Executive Summary After careful review, it is recommended that our company, Perdue Farms, move forward with bidding on the purchase of Smithfield Foods. We have conducted immense research into the following aspects both organizations: · Market Conditions · Branding · Financials · Culture · Supply Chain · Government Regulations · Risks Our assessment indicates this to be a favorable acquisition for Perdue Farms. There is ample market opportunity, with increasing demand in the pork industry up to as much as 60% by 2050. We have compiled how this acquisition will be marketed to bring brand awareness to our organization. From a financial perspective, we are recommending debt financing as interest rates are still at historic lows. Our plans to maintain and improve culture within organizations will be executed through our employee engagement strategy. We will leverage both Perdue Farms and Smithfield Foods supply chains to create a best-practices efficient way to deliver products to our customers, as well as receiving products and services from our vendors. We expect there to be government regulations that our legal team will need to resolve. However, our overall risks remain low compared to the upside for our organization moving forward. Smithfield Foods was one of America’s leading food companies derived from centuries of United States tradition. One of the most popular products Smithfield foods sold in the United States was their iconic holiday ham. The ham flavoring was derived from a curing process Native Americans taught settlers five centuries ago. In 2013, when a Chinese firm bought Smithfield Foods, it irritated many patriots and protectionists. Naturally, this reaction was to be expected; but behind the American pride was a different reality many people had not realized. At the request of the Chinese government, Chinese companies have been urged to launch a global buying spree. As part of a new phase in their unprecedented economic experiment, Chinese companies are targeting a resource that is widely forecasted to become dangerously scarce in the coming decades - food (Halverson, 2015). Foods, such as soy, wheat, and corn, are dwindling as the world’s population continues to grow. Major concerns stem from the fact that most other food products, such as pasta, bread and livestock meat are derived from these foods that are dwindling. At the same time, according to a United Nations study, global warming is destroying up to 2 percent of the world’s crop production every decade. By 2050, with the global population is expected to reach 9.8 billion and food supplies will be under greater stress. Demand will be 60% higher than it is today, but climate change, urbanization, and soil degradation will have decreased the availability of arable land. The Chinese government is already is dealing with food shortages, as m ...

1. [Type text] [Type text] [Type text]
Team Apples Final Paper 1
Team Apples Final Paper
Rivier University
Executive Summary
After careful review, it is recommended that our company,
Perdue Farms, move forward with bidding on the purchase of
Smithfield Foods. We have conducted immense research into
the following aspects both organizations:

2. · Market Conditions
· Branding
· Financials
· Culture
· Supply Chain
· Government Regulations
· Risks
Our assessment indicates this to be a favorable acquisition for
Perdue Farms. There is ample market opportunity, with
increasing demand in the pork industry up to as much as 60% by
2050. We have compiled how this acquisition will be marketed
to bring brand awareness to our organization. From a financial
perspective, we are recommending debt financing as interest
rates are still at historic lows. Our plans to maintain and
improve culture within organizations will be executed through
our employee engagement strategy. We will leverage both
Perdue Farms and Smithfield Foods supply chains to create a
best-practices efficient way to deliver products to our
customers, as well as receiving products and services from our
vendors. We expect there to be government regulations that our
legal team will need to resolve. However, our overall risks
remain low compared to the upside for our organization moving
forward.
Smithfield Foods was one of America’s leading food companies
derived from centuries of United States tradition. One of the
most popular products Smithfield foods sold in the United
States was their iconic holiday ham. The ham flavoring was
derived from a curing process Native Americans taught settlers
five centuries ago. In 2013, when a Chinese firm bought
Smithfield Foods, it irritated many patriots and protectionists.
Naturally, this reaction was to be expected; but behind the
American pride was a different reality many people had not
realized. At the request of the Chinese government, Chinese
companies have been urged to launch a global buying spree. As
part of a new phase in their unprecedented economic

3. experiment, Chinese companies are targeting a resource that is
widely forecasted to become dangerously scarce in the coming
decades - food (Halverson, 2015).
Foods, such as soy, wheat, and corn, are dwindling as the
world’s population continues to grow. Major concerns stem
from the fact that most other food products, such as pasta, bread
and livestock meat are derived from these foods that are
dwindling. At the same time, according to a United Nations
study, global warming is destroying up to 2 percent of the
world’s crop production every decade. By 2050, with the global
population is expected to reach 9.8 billion and food supplies
will be under greater stress. Demand will be 60% higher than it
is today, but climate change, urbanization, and soil degradation
will have decreased the availability of arable land. The Chinese
government is already is dealing with food shortages, as many
people are starting to eat more as they move from poverty into
the middle class. The government is pushing Chinese businesses
to acquire agricultural resources from around the world,
including the United States (Tan, 2019).
Smithfield Foods, as a United States based company, processed
32 million pigs a year. On average, one pig moved through a
Smithfield Foods processing plant every second to be prepared
for consumption. Smithfield supplied multiple restaurant chains
and many grocery stores in the United States. It represented the
height of America’s industrialized farming, owning everything
from hog farms in Iowa, to the slaughterhouses outside Chicago,
warehouses, and distribution trucks across the United States.
With the Smithfield purchase, a Chinese company now owns 1
in 4 pigs raised in the United States (Halverson, 2015).
The acquisition of Smithfield Foods helps China carry out their
government’s plan to improve the quality and scarcity of their
food supply. The United States government should be taking
immediate action to follow suit and prevent food insecurity in
the United States. The United States food industry is too vital of
an industry for the United States government to allow it to be
disrupted by Chinese government interests. If Perdue Farms is

4. approved to buy back Smithfield Foods from China, the United
States will be in a better position to retain more United States
farmland, livestock, and other agricultural resources needed to
maintain food security in the Unites States.
Market Conditions – Competition
Market conditions for the meat industry are showing positive
trends and opportunities in the upcoming year. Global strategist,
Justin Sherrard of Rabobank, anticipates more competition for
the United States in the export markets due to increase
production in most parts of the world (Einstein, 2018). In
Mexico there is growing competition for pork and poultry
markets. Throughout China and Asia there appears to be
growing competition in poultry.
The Trans-Pacific Partnership was an agreement that covered
tariffs on goods and services, intellectual property, and other
aspects of global trade. The goal of this deal spanning several
continents and covering 40% of world trade (McBride, 2019).
President Barack Obama had entered the US into this
partnership to ensure the U.S was the one writing this century’s
rules of the world’s economy, and not countries like China
(2019). In 2017, President Trump withdrew the U.S from the
partnership claiming it would push manufacturing jobs overseas
(2019). There have been talks of re-entering into this
partnership which according to global strategist Sherrard, would
be very positive for the meat industry’s opportunity in global
trade (Einstein, 2018).
SWOT Analysis Perdue Farms & Smithfield Foods
Strengths for Perdue Farms include strong marketing and
ability to charge premium prices for its established quality.
Another strength is it’s selective breeding that and has
developed more quality chickens (Perdue Farms, 2019).
Weaknesses contain change in management style from

5. centralized to decentralized along with a decline in the chicken
market. Opportunities for Perdue are the rise in popularity of
turkey and chicken with current diet trends and industry
consolidation is becoming more popular opening a door to
acquire other industry competitors (2019). A threat to Perdue is
it’s smaller global footprint than its competition that are mostly
operate across the globe.
The strengths for Smithfield foods are being the top pork
producer and processor and having operations 26 U.S states,
Mexico, and 10 European countries (Fusaro, 2018). It’s positive
hog production fundamentals in Europe are fueling profitability
internationally. Weaknesses include an increase in prices for
feed ingredients and fluctuations in foreign currency exchange
rates (Zigu, 2018). Some opportunities for Smithfield Foods
include meeting consumer demands of better for you foods that
are lean protein and include natural ingredients, along with
innovating it’s packaging to differentiate for quality and
convenience (2018). Threats include cost increases due to rising
interest and exchange rates and pressure associated with food
safety (2018).
Competitor Profile: Tyson foods.
Tyson foods is based in Springdale, Arkansas and is the world’s
second largest processor and marketer of chicken, beef and
pork. Tyson operates through four segments, chicken, beef,
pork, and prepared foods and it annually exports the largest
percentage of beef in the United States. Tyson’s annual revenue
is $40 billion (Tyson Foods, 2019).
Competitor Profile: Pilgrims.
Pilgrim’s is a leading global poultry and prepared foods
company and has 36 production facilities and 16 prepared foods
facilities across the U.S, Puerto Rico, Mexico, the U.K and
Continental Europe. The company is Brazilian owned Pilgrim’s

6. is headquartered in Greenly, Colorado and has an annual
revenue of $10.7 billion and 54,000 employees (About Us,
2019).
Competitor Profile: Hormel Foods.
Hormel foods produces a range of meat and food products and
sells these products throughout the United States and
Internationally. The company operates through four segments,
grocery products, refrigerated foods, Jennie-O Turkey Store,
and International. Hormel foods is headquartered in Austin, MN
and have 20,000 employees worldwide. Their annual revenue is
$9.5 billion (About, 2019).
Competitor: JBS Foods
JBS Foods is the leading processor of beef and pork in the U.S
with more than $50 billion in annual sales. JBS is headquartered
in Greenley, Colorado and is a majority shareholder of
Pilgrim’s Pride Corporation. The company sells its products to
more than 105 countries on six continents and employs more
than 100,000 team members (JBS, 2019).
Branding
Purchasing Smithfield Foods, will include a complex
marketing campaign that innovatively markets the acquisition to
maintain brand strength while also ensure new product success.
Since Pork was the main product of Smithfield Foods, the four
points of branding success will be “Perdue saves America”,
Perdue Pork, Summers of Perdue, and brand separation. The
goal of the branding campaign will be to gain respect
surrounding the acquisition and bring awareness to the new
products. Additionally, the marketing campaign will have
consumer involvement using fun slogans that can trend on
social media and attract ads.
“Perdue saves America” will be the focal marketing point

7. surrounding the acquisition. Buy American and isolationism is a
position that the current regime is taking in politics. Though
Perdue will by no means take a political stand, commercials will
be used showing a chicken saving a pig from China. The
message will be fun and light that Perdue is establishing
American dominance, protecting American jobs, and promoting
American business. Perdue saves America is innovative because
not many businesses can say they are trending in the domestic
direction; many businesses are outsourcing and globalizing so
Perdue can take gain consumer support through their unique
acquisition.
To coincide with these commercials, Perdue will take
advantage of social media by employing a Summer of Perdue
social media campaign. The company will reach out to
influencers on social media and provide funding to through
parties and cookouts as long as Perdue chicken and pork is at
least visible in the picture. Perdue will sponsor as many summer
events out there and provide free samples to the people.
Additionally, Perdue will host a Perdue Pork contest. The
individual who makes the most like recipe with the new product
will win one million dollars. This part of the branding campaign
will get the word out to consumers and allow them to provide
word of mouth marketing.
Perdue Pork will be an experimental marketing strategy
that will work oppositely with the Brand separation strategy.
Perdue will employ some of the Smithfield Products into the
Perdue brand to make Perdue Pork while maintaining some of
the products with their original Smithfield name. A study will
occur to see if the new Perdue name or the original name will
perform better. This will allow the company to accurately know
whether they should keep the old name or lean on the Perdue
brand name for success.
The combination of these branding strategies will allow for
the company to reach consumers of all varieties. The campaign
will have daily metrics to monitor success like sales, views,
hashtags, and tweets. After a couple months the company can

8. evaluate whether Smithfield Products should remain separate
from the traditional chicken brand or create a powerhouse
Perdue family of products.
Financing Options for Smithfield Foods Merger and Acquisition
The reacquisition of Smithfield Foods back to U.S Corporation
from the recent Chinese buyer and current owner relates to
various financial options such as value of assets, liabilities,
firm value, and source of financing. The financing options
available for the acquisition are important to consider because
the company is being reacquired and the business is seeking to
achieve profitability. The first financial consideration is the
total value of assets. The value of assets is important for
consideration as it influences the acquisition price. The acquirer
sets the prices based on the value of total assets (Bena & Li,
2014). This covers the value of property, plant, and equipment,
cash balance, and value of inventories, accounts receivables,
and short-term investments. Under the IFRS guidelines, the
acquisition price should be based on the prevailing market value
of assets (Gaughan, 2010). It is also important to establish the
book value of assets for the calculation of total value of firm
(Bena & Li, 2014). Understanding the value is important in the
reacquisition of Smithfield Foods from the current Chinese
buyer.
Secondly, the value of liabilities is important in the acquisition
and mergers processes. The IFRS requires that the acquisition
price of an entity should be based on the net value of assets.
This represents the difference between total assets and total
liabilities. The liabilities represent the financial obligations that
the target company has on the external and internal financial
lenders (Custodio, 2014). It is important to consider the value
of liabilities in respect to assets for the Smithfield acquisition.
Finally, the sources of funds is an important consideration for
the acquisition of Smithfield Foods back to the U.S Corp. The

9. funding sources available include debt and equity financing. It
is recommended that the company should embrace debt
financing over equity to maintain strong control of the
organization.
Culture
Work culture plays an important role in an organization. Its
main goal is to extract and maintain the very best out of the
employees. It is imperative that employees enjoy their
workplace and over time develop a sense of loyalty towards it.
In order to achieve this, the organization must offer a positive
work ambience in order to allow the employees to concentrate
on their work.
When there is talk about the success (or failure) of a
merger/acquisition (M/A), things are looked at from a big-
picture perspective using financials as the main unit of measure
while the human element is often lost or ignored. But what
happens when an M/A is announced? What becomes of the
work culture of those employees who are now affected? Can an
M/A really be considered successful if employees are quitting
their positions and morale is at an all-time low?
An organization’s leadership team needs to understand the
impact an M/A may have on their employees and commit to
prioritizing the employee experience during such a change.
Employees are imperfect and fueled by emotions which can
create an unhealthy environment and disengagement, and they
will experience a number of feelings that need to be addressed.
Creating an employee engagement strategy that accounts for the
unique emotions the employees may experience in their work
culture is a necessity. Some areas that apprehensive employees
may experience, and how to try to mitigate them, are:
Anxiety – Once the announcement is made, a massive and
abrupt disruption from the norm can create a flood of questions
as well as employees may be engulfed by a cloud of uncertainty,
fear, lose productivity, become stressed out, or even quit.

10. These can negatively impact the work culture. Leadership
should have an internal communication plan that is multi-tiered
and intentional to add clarity and ease worry. As time goes on,
leadership needs to continue to listen to their employees and
address any new questions or concerns that may develop along
the way.
Selfishness – Employees may feel threatened or uncertain about
their future, and in the interest of self-preservation now only
think about themselves and have little regard for others,
crippling essential team dynamics. Management can fight
selfishness with relationship building by creating opportunities
for teams to collaborate and remind everyone they all need
support.
Grief – This can come in any form such as a co-worker has to
leave, the work culture they are accustomed to dissolves or
changes drastically, or their own job role may change. These
can seriously impact an employee’s psychological health and
feelings of denial, anger, sadness, etc. can emerge as they try to
deal with the loss of meaningful parts of their work. Leaders
have to be human in their approach to these situations knowing
it may take some time for employees to accept the change.
Driving excitement about the M/A is fine, but management
needs to be sensitive to the fact that some employees are
genuinely feeling a sense of loss.
Pride – It is not uncommon for one company to be more
dominant than the other and superiority can rear its ugly head.
Outside of market share and profit, an M/A is designed to build
one unified work culture from two. Pride, on either side, can
create division and keep the new work culture from forming.
Being condescending to new team members or hoarding
knowledge is defeating. Management should find those who are
proud and excited about the new M/A and have them become
mentors or teachers to the newly formed teams.
Excitement - Not all employees will be apprehensive, negative,
or despondent with an M/A. There will be those who are
excited about it and the positivity it can bring to their work

11. culture. Leaders should form task forces with these individuals
as they would become good ambassadors for the change and can
help bridge the gap.
Mergers and acquisitions will continue to be a key strategy for
organizations looking to attain greater market share and
increase profits. Change in work culture will be a huge part of
any M/A and management needs to have their own employee
engagement strategy in place. It is the management’s empathy
for what their employees are feeling that will grow the
positivity needed to work through hard changes. Remembering
that everyone is human during the merger/acquisition could be
the ultimate difference between success and failure.
Culture, cont’d
Every company’s success depends upon the efficient work of its
employees and the efficiency rate of employees depends upon
the board of the company that how much facilities does
employees are getting and how happy they are with their jobs.
Same thing goes for the Perdue chicken and Smithfield foods.
We can determine the success rate to some extent of these both
companies on the basis of its former and current employee’s
reviews. According to the Anne M. Mulcahy, former CEO of
Xerox, “Employees who believe that management is concerned
about them as a whole person – not just an employee – are more
productive, more satisfied, more fulfilled. Satisfied employees
mean satisfied customers, which leads to profitability.”
According to the brightermonday.co, indeed.com and
glassdoor.com, these are the following five generic factors
which plays an important role in the happiness rate of
employees in any company:
1. Praise and Recognition: This one is probably the most
important factor for the happiness of the employees in any
company. Every employee wants to be praised for his good
work and employees tend to seek the recognition from the
company when they are working hard for the objectives and
vision of the company. So praise and recognition plays an

12. important role in the happiness of the employees.
2. Meaningful and Interesting Work: The employees who are
tasked with the jobs they love to do or find more interesting
always yields the highest performance and efficiency. Salary is
not everything as employees who love to do their jobs tends to
stick around more. (Shu Zhou, 2013)
3. Work-Life Balance: Companies needs to provide an
atmosphere to its employees where they can have a balance
between their work and personal life. This balance requires that
employees gets emergency leaves, friendly environment with in
the company and ability to do work from home when necessary.
4. Organizational Trust, Culture and Environment: This factor is
also very important as it plays an important part in the
relationship of employees and managers. The employees who
like to work independently will be happier at the company
which promotes the culture of individual performance.
5. Professional Growth and Development: The salary is not
everything for any employee. The employees wants to see their
professional skills honed and they want to grow professionally
with the passage of time. So it is up to the company to keep the
employees busy with critical responsibilities or monthly
training programs to help them grow professionally.
We can deduce a number of results from the reviews of former
and current employees of Perdue chicken and Smithfield foods
on indeed.com and glassdoor.com. The employees at both the
companies think that working hours are very hectic and the
employees are generally unhappy with the supervisors and the
mangers so board of both companies needs to attend this matter.
The positive change could be that there should be policies to
maintain the work-life balance of employees and managers and
supervisors needs to appreciate the employees for their good
work and build a more professional and friendly relationship.
Following are the average ratings given by employees of Perdue
chickens:

13. Following are the average ratings of Smithfield foods given by
the current and former employees of the company:
Supply Chain
Managing supply chain is the most integral and fundamental
part of any organization. Supply chain simply means all the
processes and factors that involves in the creation of a product
and then its distribution and sale in the market. A supply chain
is a network of facilities and distribution options that performs
the functions of procurement of materials, transformation of
these materials into intermediate and finished productss, and the
distribution of these finished products to customers. Supply
chains exist in both service and manufacturing organizations,
although the complexity of the chain may vary greatly from
industry to industry and firm to firm. (Ganeshan & Harrison,
1995) Supply chain management consists of three important
levels; strategic, operational and tactical.
The strategic level usually deals with the creation of the
product, handling the vendors and suppliers. So how can both
companies, Smith Foods and Perdue Chickens, get benefits from
each other’s supply chain strategy?
First of all we will have to sum up the common products the
both companies are making because the common products
requires same raw materials which are available from the same
type of suppliers. So the Smith foods gets all of its raw
materials for dairy products from different suppliers all over the
country but it can get those raw materials from the Perdue
Farms e.g. eggs.
On the other hand the Perdue Farms requires the chicken feed
and they don’t make the feed on their own. So Perdue chicken
has to rely on the outside suppliers for the chicken feed. The

14. Smith Foods has a product line of chicken feed as well so
Perdue chicken can always use the product of Smith foods as
their raw material.
Apart from supplying the raw materials to each other both
companies can share the logistics department for the supply of
the products into the market.
Government Regulations in Mergers and Acquisitions
The reacquisition of Smithfield Foods from the Chinese buyer
back to U.S captures several government regulation issues that
will affect the success and valuation of the company for
acquisition. The major government legislation issue relates to
the cross-border regulations on mergers and acquisition
(Heinemann, 2012). The fact that Smithfield Foods is being
reacquired from a Chinese buyer introduces the procedures to
the US and Chinese regulations. The government restrictions on
the cross-border restrictions will affect the process and
acquisition value (Alimov, 2015). The controls also increase the
cost of acquisition. The company’s management will undergo a
series of legal issues that may prolong the process and make it
costly (Green, 2016). The regulations cover the labor market.
For instance, the absorption of employees in the Chinese plant
back to US introduces legal issues such as compensation and
regulatory taxes. The political risks affect the reacquisition of
Smithfield Foods. The trade wars between China and US also
affects the acquisition process based on costs and regulatory
requirements.
The termination of $240,000 for Smithfield by the USDA also
impacts the acquisition process. Both China and U.S apply
different laws on contractual agreements that affect the
acquisition process. In the reacquisition of Smithfield Foods,
the incorporation of the terminated contract into the valuation
affects the pricing and procedures. The renegotiation of the
contract when the company is under the U.S management is also
a significant issue in the process based on the applicable laws

15. and procedures (Luo, Xue & Han, 2010). Finally, from a
government perspective, the taxation laws play a critical role in
the reacquisition of Smithfield Foods. The differences in the
taxation are significant in the negotiation and incorporation in
the deal. It influences the acquisition costs and firm valuation.
Risks
A corporate merger can have huge effect on a company’s growth
and long term goals. Merger can be profitable and beneficial for
the company as it helps its business to expand. Companies also
engage in merger & acquisition to dominate their sector. The
acquisition of Smithfield Foods could lead to potential risks and
challenges for Perdue farms as the company’s strength revolves
around chicken production in the US. Perdue farms is one of the
largest poultry producers in the U.S. and one of the world’s
leading producers of organic chicken, while on the other hand,
Smithfield Foods is a meat processing company and the world’s
largest hog raiser and pork producer.
Risk Name
Description
Severity
1. Overpayment
· Perdue may have to overpay and come up with huge budget to
acquire Smithfield Foods since it is the current biggest asset of
Shuanghui International.
High
2. Culture Assimilation Challenges
· Corporate cultures of the potential merging companies differ
from each other so it may pose a risk to the company’s growth.
Moderate
3. Target Achievement

16. · It might be difficult task for the integrated companies to
achieve a desired target for sales and marketing due to
differences and cost saving and economies of scale.
Moderate
4. Losing Chinese Market
· The deal might largely affect the exports of pork from US to
China as Shaunghui International could potentially replace
Smithfield / Perdue as pork supplier to China since China is one
of the largest pork consuming country.
High
5. Employee anxiety, and engagement issues
· The process may lead to high expectations from employees
that could lead to anxiety and might have differences in moral
values. Job security would be reason for concern as there is a
chance of layoffs.
Low
The acquisition poses great scope for growth through expansion
and diversification. The companies should foresee the
challenges that might arise due to the acquisition. It is vital for
the company to obtain a professional advice before the
acquisition to manage the merge effectively and efficiently and
to prevent the above mentioned potential risks and losses that
may face in the process.
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mergers and acquisitions. Journal of International Business
Studies, 46(8), 984-1009.
Green, M. B. (2016). Mergers and acquisitions. International
Encyclopedia of Geography: People, the Earth, Environment and
Technology, 1-9.
Heinemann, A. (2012). Government control of cross-border
M&A: legitimate regulation or protectionism? Journal of
International Economic Law, 15(3), 843-870.
Luo, Y., Xue, Q., & Han, B. (2010). How emerging market
governments promote outward FDI: Experience from
China. Journal of World Business, 45(1), 68-79.
1

20. Purdue Farms should move forward with bidding on the
purchase of Smithfield Foods.
The following will be discussed in detail supporting our
position:
Market Conditions
Branding
Financials
Culture
Supply Chain
Government Regulations
Risks
Jon Giglio
Our assessment indicates this to be a favorable acquisition for
Purdue Farms. During this presentation, we will discuss in
detail why we know this will be a favorable business move for
our great company. There is ample market opportunity, with
increasing demand in the pork industry up to as much as 60% by
2050. We have compiled how this acquisition will be marketed
to bring brand awareness to our organization. From a financial
perspective, we are recommending debt financing as interest
rates are still at historic lows. Our plans to maintain and
improve culture within organizations will be executed through
our employee engagement strategy. We will leverage both
Purdue Farms and Smithfield Foods supply chains to create a
best-practices efficient way to deliver products to our
customers, as well as receiving products and services from our
vendors. We expect there to be government regulations that our
legal team will need to resolve. However, our overall risks

21. remain low compared to the upside for our organization moving
forward.
2
Market Conditions – Smithfield Foods helps U.S. Food
Sustainability
Major food ingredients dwindle, while the world’s population
continues to grow
Most food products are derived from the dwindling ingredients
Global population expected to reach 9.8 billion in 2050
Chinese companies are strategically acquiring agricultural
resources, while U.S. helps them
Smithfield Foods helps China improve the quality and scarcity
of their food supply
Smithfield purchase give Chinese company 1 in 4 pigs raised in
the United States
Smithfield Foods in the U.S retains more farmland, livestock,
and other agricultural resources needed for food security
Lia Bobek
3
Market Conditions – Competition
Meat Industry Competition
Positive market trends for the Meat Industry
New Discussions regarding the Trans-Pacific Partnership
SWOT Analysis – Perdue Farms
Strengths: Marketing & Premium Prices

22. Opportunities: Diet Trends & Consolidation
Weaknesses: Management Change & Chicken market
Threat: Global footprint
SWOT Analysis – Smithfield Foods
Strengths: Top Pork Producer
Opportunities: Consumer demands & Packaging
Weaknesses: Price for feed
Threats: Rising Interest & Exchange Rates
Main Competitors for Perdue Farms & Smithfield Foods:
Tyson Foods
Pilgrim’s
Hormel Foods
JBS Foods
Anna Stepper
Global strategists are predicting positive trends and
opportunities in the upcoming year for the Meat Industry.
Competition will likely increase in the U.S export markets due
to increase in production in most parts of the world. Also to
note, there appears to be growing competition for poultry in
China and Asia while there is growing competition for pork and
poultry in Mexico.
Another Industry note that would have an impact on competition
is a potential change to the United State’s participation in the
Trans Pacific Partnership. President Trump is now hinting at the
possibility of re-entering into the partnership which would be
very positive for the meat industry’s opportunity in global
trade.
SWOT analysis has been completed in order to analyze Perdue

23. Farms and Smithfield Foods position in
the market.
Strengths of Perdue Farms are their strong marketing and their
ability to charge premium prices for its established quality.
They are known for their selective breeding which has
developed quality chickens.
Weaknesses are the change in management that they have had
from centralized to decentralized, along with a decline in the
chicken market in the U.S.
Some Opportunities for Perdue are the rice in popularity of
turkey and chicken with current diet trends and the popularity
and possibility of acquiring other industry competitors.
The Threat to Perdue is the fact it has a smaller global footprint
than many of its competition.
For Smithfield, their strengths are being the top pork producer
and processor and having operations in 26 U.S states, Mexico,
and 10 European countries.
Weaknesses are increase in prices for feed ingredients and
fluctuations in foreign currency exchange rates.
Some opportunities include meeting consumer demands for
“better for you foods” that are lean protein and include natural
ingredients, and to differentiate by innovating it’s packaging for
quality and convenience.
Threats for Smithfield are the increasing costs due to rising
interest and exchange rates and pressures associated with food
safety.
They main competition to both Smithfield Foods and Perdue
Farms are Tyson Foods, Pilgrims, Hormel Foods and JBS. The
similarities in the competitors mentioned are they all have an
international presence, with productions in different countries
and also selling products globally.
Based on the competition and market conditions, it appears it
would be mutually beneficial for Perdue Farms to acquire

24. Smithfield Food. This would allow them to have a stronger
range of product offerings of pork and poultry. Perdue would
also benefit from Smithfield's strong global presence for
production and processing. With potential increase in poultry
competition in China and Asia, it would be a great opportunity
to enter the competition with a high quality poultry product,
such as Perdue chicken. Overall, the market conditions look to
be improving and the combined efforts of both Smithfield and
Perdue would put them in a very good position.
4
Branding the Acquisition
Erica Venditouli
5
Three Steps for Perdue Success
“Perdue saves America”
Summer of New Perdue
Perdue Pork Trial
Campaign showing chicken saving pig from China

25. American comradery
Joining of brands
Cookout commercials and Instagram advertising with new
products
Contest for best recipe for new product
Use Influencers and trend setters
Strategize best name for Smithfield Food products
Research on new name or addition to Perdue family name
Ensure old brand success and effective new product integration
Financing Options for Smithfield
The valuation process and calculation of total assets is an
important consideration for Purdue.
The total value of assets determines the offer price for the
company.
It covers the value of property, plant, and equipment, cash
balance, and value of inventories, accounts receivables, and
short-term investments.
It is also important to establish the book value of assets for the
calculation of total value of firm .

26. Divya Uyyuru
Valuation is an important process in the acquisition of a
company as it involves determination of a company’s value. The
total value of a company is obtained from the difference
between assets and liabilities. When a company has high asset
value compared to liabilities, it is expected that there will be a
high value. For Smithfield, the total value is expected to be
high due to the strong financial position and performance. It
will be important to get the actual value of property, plant, and
equipment, cash balance, and value of inventories, accounts
receivables, and short-term investments in the calculation of the
firm value for acquisition purposes. The book value of these
assets helps in establishing the actual value of the firm for
pricing purposes.
6
Financing Options for Smithfield (Cont’d)
The value of liabilities is important in the acquisition and
mergers processes.
The liabilities represent the financial obligations that the target
company has on the external and internal financial lenders
(Custodio, 2014).
It is important to consider the value of liabilities in respect to
assets for the Smithfield acquisition.
The funding sources available include debt and equity
financing.
It is recommended that the company should embrace debt
financing over equity to maintain strong control of the
organization.

27. Divya Uyyuru
Since Purdue has a weaker financial position, it will be
necessary to seek external financing through debt or equity
financing. The company should consider debt financing as the
appropriate option for the company’s assets. The calculation of
liabilities value is also important in the determination of
Smithfield’s total value for acquisition price.
7
Work Culture &
Employee Reaction
Anxiety
Fear
Apprehension
Stress
Selfishness
Feeling threatened
Uncertainty about future
Grief
Denial
Anger
Sadness
Pride
Domination
Superiority
Excitement
Positivity
Future thinking

28. Adrianne Havlicek
During this slide presentation, each one of the subjects listed
would be discussed on how employees may be feeling after a
merger/acquisition has been announced and how management
can help mitigate these emotions.
8
Factors of Employees Happiness in a Company
Companies Success rate depends upon the happiness of
employees.
Factors which play important role in the happiness of employees
Suggestions to improve the happiness rate of employees
Average rating by the former and current employees of Perdue
Chicken:
Average rating by the former and current employees of Smith
Foods:
Dinesh Vanipenta
“Employees who believe that management is concerned about
them as a whole person – not just an employee – are more
productive, more satisfied, more fulfilled. Satisfied employees
mean satisfied customers, which leads to profitability.” Anne

29. M. Mulcahy, former CEO of Xerox
According to the brightermonday.co, indeed.com and
glassdoor.com, these are the following five generic factors
which plays an important role in the happiness rate of
employees in any company:
1. Praise and Recognition 2. Meaningful and Interesting Work
3. Work-Life Balance 4. Organizational Trust, Culture and
Environment 5. Professional Growth and Development
The employees at both the companies think that working hours
are very hectic and the employees are generally unhappy with
the supervisors and the mangers so board of both companies
needs to attend this matter. The positive change could be that
there should be policies to maintain the work-life balance of
employees and managers. Also supervisors needs to appreciate
the employees for their good work and build a more
professional and friendly relationship.
9
Supply Chain
What is supply chain?
Levels of supply chain
How can Perdue chicken and Smith foods combine their supply
chain to be mutually beneficial
Mutual products
Logistics department
Parasurama Parasurama
Supply chain simply means all the processes and factors that
involves in the creation of a product and then its distribution
and sale in the market. A supply chain is a network of facilities
and distribution options that performs the functions of
procurement of materials, transformation of these materials into
intermediate and finished products, and the distribution of these
finished products to customers.

30. Supply chain management consists of three important levels;
strategic, operational and tactical.
2. Perdue Farms requires the chicken feed and they don’t make
the feed on their own. So Perdue chicken has to rely on the
outside suppliers for the chicken feed. The Smith Foods has a
product line of chicken feed as well so Perdue chicken can
always use the product of Smith foods as their raw material.
3. First of all we will have to sum up the common products the
both companies are making because the common products
requires same raw materials which are available from the same
type of suppliers. So the Smith foods gets all of its raw
materials for dairy products from different suppliers all over the
country but it can get those raw materials from the Perdue
Farms e.g. eggs.
Apart from supplying the raw materials to each other both
companies can share the logistics department for the supply of
the products into the market
10
Cross-border regulation is the major governmental regulation
issue in the process.
The fact that Smithfield, a China-based firm is being acquired
by Purdue, a US-based firm creates cross-border regulation.
The government restrictions on the cross-border restrictions will
affect the process and acquisition value (Alimov, 2015).
The controls and government regulations are likely to increase
the costs of acquisition or merger.
It also covers the transfers across the labor markets that affects
the process.
Government Regulations Mergers and Acquisition

31. Mahesh Babu
The cross-border regulation affects the extent to which Purdue
will engage in acquiring Smithfield from the current owner. The
regulations have the potential of increasing acquisition costs or
introducing new requirements that might make the process
complex. With the increase in costs due to the cross-border
regulations, it is expected that the firm value will go up,
affecting Purdue’s ability to pursue the acquisition process. The
government regulations will also affect the transfer of workers
and assets across the borders. The trade wars between China and
US is also expected to play a significant factor as Purdue plans
to acquire Smithfield Foods from the current owner.
11
The termination of $240,000 for Smithfield by the USDA also
impacts the acquisition process.
The renegotiation of the contract when the company is under the
U.S management is also a significant issue in the process based
on the applicable laws and procedures (Luo, Xue & Han, 2010)
The taxation laws play a critical role in the reacquisition of
Smithfield Foods
Government Regulations Mergers and Acquisition (Cont’d)
Mahesh Babu
The legal issues such as the decision to terminate the $240,000
for Smithfield by USDA will affect the acquisition process. The
contractual agreements are part of the acquisition process and
the termination will affect the procedure in terms of efficiency
and costs. It is expected that there will be a significant increase
in the regulation costs since the process involves cross-border

32. transaction. The acquisition of Smithfield by Purdue involves a
series of negotiations from both parties and the government
regulations on the acquisition process will affect the process.
Finally, as part of the government regulations, it is expected
that the taxation laws will influence the process and company’s
decision to complete the process. High taxation may discourage
the process considering the fact that Purdue has a poor financial
performance and position compared to Smithfield.
12
Risks of Acquisition:
Risk NameDescriptionSeverity1. Overpayment Purdue may have
to overpay and come up with huge budget to acquire Smithfield
Foods since it is the current biggest asset of Shuanghui
International.
High2. Culture Assimilation ChallengesCorporate cultures of
the potential merging companies differ from each other so it
may pose a risk to the company’s growth.
Moderate 3. Target Achievement It might be difficult task for
the integrated companies to achieve a desired target for sales
and marketing due to differences and cost saving and economies
of scale.
Moderate 4. Losing Chinese Market The deal might largely
affect the exports of pork from US to China as Shaunghui
International could potentially replace Smithfield / Purdue as
pork supplier to China since China is one of the largest pork
consuming country.
High5. Employee anxiety, and engagement issues The process
may lead to high expectations from employees that could lead to
anxiety and might have differences in moral values. Job security
would be reason for concern as there is a chance of layoffs.
Low

33. Harmandeep Dhuck
A corporate merger can have huge effect on a company’s growth
and long term goals. Merger can be profitable and beneficial for
the company as it helps its business to expand. Companies also
engage in merger & acquisition to dominate their sector. The
acquisition of Smithfield Foods could lead to potential risks and
challenges for Purdue farms as the company’s strength revolves
around chicken production in the US. Purdue farms is one of the
largest poultry producers in the U.S. and one of the world’s
leading producers of organic chicken, while on the other hand,
Smithfield Foods is a meat processing company and the world’s
largest hog raiser and pork producer.
Below are the potential risks that would be an obstacle in
acquiring Smithfield Foods.
Overpayment - Shuanghui’s one of the biggest asset to date is
smithfield foods, acquiring the company would lead to
overpayment for Purdue. They need to come up with large
budget to buy Smithfield because it is an established and
international company.
Cultural Assimilation Challenges – Purdue and Smithfield both
differ from each other in the sense that have different buyers for
their meat production since purdue produces chicken while
Smithfield is a pork producer. Both companies have different
target market. To have successful acquisition between two
companies, the team leaders / managers of both company should
coordinate and cooperate by making a set of shared rules with a
common goal.
Target Achievement – achieving target goals in any company is
important and it is a daunting task to reach the desired target for
sales and marketing as the two companies have different target
market and differences in cost saving. The management team

34. should communicate the target goals with the employees and set
standards to achieve it.
Losing Chinese Market – Smithfield is currently owned by a
Chinese company and has a huge market in China, since they
are the biggest producer and consumer of pork. Selling the
company back to US would lead to potential risk of losing
Chinese market for pork supply. Smithfield might have to find
another international buyer in China.
Employee anxiety and engagement issues – employees of the
merging companies might land in distress due to the fear of post
merger layoffs. Employees might have less confidence with the
management team.
The acquisition poses great scope for growth through expansion
and diversification. The companies should foresee the
challenges that might arise due to the acquisition. It is vital for
the company to obtain a professional advice before the
acquisition to manage the merge effectively and efficiently and
to prevent the above mentioned potential risks and losses that
may face in the process.
13
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International Encyclopedia of Geography:
People, the Earth, Environment and Technology, 1-
9.
Heinemann, A. (2012). Government control of
cross-border M&A: legitimate regulation or
protectionism? Journal of International Economic Law,
15(3), 843-870.
Luo, Y., Xue, Q., & Han, B. (2010). How emerging
market governments promote outward FDI:
Experience from China. Journal of World
Business, 45(1), 68-79.
Hermann-Nehdi, A. (n.d.). 4 pain points
employees will face during a merger or
acquisition.
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will-face-during-a-merger-or-acquisition
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MGS
Management Study Guide. Retrieved from:
https://www.managementstudyguide.com/work-culture.htm
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Factors Influencing Employees’. American Journal
of Industrial and Business Management, 719-724.
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Foods/reviews
Ganeshan,R., & Harrison, T. P. (1995). An
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Pennsylvania.
Alimov, A. (2015). Labor market regulations
and cross-border mergers and
acquisitions. Journal of International Business
Studies, 46(8), 984-1009.
Green, M. B. (2016). Mergers and acquisitions.
International Encyclopedia of Geography:
People, the Earth, Environment and Technology, 1-
9.
Heinemann, A. (2012). Government control of
cross-border M&A: legitimate regulation or
protectionism? Journal of International Economic Law,

40. 15(3), 843-870.
Luo, Y., Xue, Q., & Han, B. (2010). How emerging
market governments promote outward FDI:
Experience from China. Journal of World
Business, 45(1), 68-79.