NEW YORK -- China's Shuanghui International Holdings Limited announced Wednesday that it has entered into a definitive merger agreement with the world's largest pork processor, Smithfield Foods, to create a leading global pork enterprise.

The acquisition valued Smithfield at approximately 7.1 billion U.S. dollars, including the assumption of Smithfield's net debt.

Under the terms of the agreement, Shuanghui will acquire all of the outstanding shares of Smithfield for 34 dollars per share in cash. The purchase price represents a premium of approximately 31 percent over Smithfield's closing stock price on Tuesday.

"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," said Shuanghui Chairman Wan Long.

The transaction is expected to close in the second half of 2013. The closing of the transaction is subject to the approval by Smithfield's shareholders and related legal procedures, among others.

"This transaction provides Smithfield shareholders with significant and immediate cash value for their investment, and ensures that Smithfield will continue to execute on its strategic priorities while maintaining our brand excellence, community involvement, and our commitment to environmental stewardship and animal welfare," said C. Larry Pope, president and CEO of Smithfield.

Smithfield Foods is a 13-billion dollar global food company and the world's largest pork processor and hog producer. Shuanghui International and its subsidiaries are the majority shareholders of Henan Shuanghui Investment and Development Co., which is China's largest meat processing enterprise and is publicly traded on the Shenzhen Stock Exchange.