Under the Shuanghui agreement reached in May, Smithfield is allowed to delay the September meeting if it lacks sufficient votes to approve the acquisition. The deal has a Nov 29 closing deadline.

"We believe the board failed to run a full and fair process to sell the company, in whole or in part, to ensure that shareholders realized the highest possible price," Starboard said in its letter. "It is our belief that the proposed merger undervalues Smithfield and that with more time an alternative proposal to the board at a superior price for shareholders could be available."

While the hedge fund said it would vote against the proposed merger, it would back the Shuanghui deal if "a superior third-party acquisition" failed to materialize.

Michael Swanson, Wells Fargo's chief agricultural economist, said he doesn't follow individual transactions, but he said that Starboard's claim to have received indications of interest that imply a value "substantially" above the purchase price offered by Shuanghui raises questions, given the maturity and highly competitive nature of the pork processing industry.

"For someone to discover 'substantially above' value from that bid requires some assumptions that have to be proven out," he said. "The persons who need to be the most critical of the assumptions in the transaction are the holders of the debt." When announced, the deal was valued at $7.1 billion, including assumed debt, meaning the debt was valued at about $2.38 billion.

Shuanghui's $34 a share offer for Smithfield represented a 31 percent premium to the company's share price of $25.97 before the deal was announced.

"Shuanghui International Holdings Ltd explained their premium as a 'China growth' assumption," Swanson said. "Whether that is true or false is a very debatable assumption."

Fink also said he doubted Starboard has the clout to delay the Sept 24 special shareholder meeting. Fink said 6.1 million of the 8 million shares Starboard controls are in the form of non-voting call options. "So unless Starboard decides to exercise these options and forfeit time value associated with the options in order to gain voting power, I don't think Starboard has anywhere near the voting power necessary," he said.

Smithfield did not return a call for comment on these latest developments.

michaelbarris@chinadailyusa.com

(China Daily USA 09/05/2013 page1)