One of Smithfield Foods' shareholders says it is close to finding an alternative buyer for the company, which will offer a higher price than Shuanghui International Holdings Limited, according to ValueWalk.

Jeffrey Smith, head of hedge fund, Starboard Value LP, has sent a letter to fellow Smithfield shareholders, explaining that his company is in discussion with a group of buyers to offer an alternative higher acquisition price for the world's largest pork processor and pig producer.

In an open letter to shareholders, Mr Smith says that Starboard Value LP, together with its affiliates, currently owns securities representing approximately 5.7 per cent of Smithfield Foods, having held those shares since March 2013.

Following the announcement on 29 May that Smithfield and Shuanghui had entered into a definitive merger agreement valuing Smithfield at approximately $7.1 billion, or $34.00 per share, Starboard wrote to Smithfield's directors, expressing the view that Smithfield could be worth well in excess of $34.00 per share, that other parties had shown interest in the Company’s operating divisions and that a piece-by-piece sale would realise a higher overall value.

The latest letter to Smithfield shareholders provides an update on Starboard's progress to date and comments on the special meeting of shareholders, scheduled to be held on 24 September, at which shareholders will be asked to vote on the Proposed Merger.

Mr Smith writes that, over the last two months, he has received non-binding written indications of interest from third parties, based on publicly available information, for each of Smithfield’s assets, which in the aggregate imply a total value for Smithfield at a price "substantially higher" than the $34 cash deal with Shuanghui.

Based on these indications of interest, he continues, Starboard is working with the indicated buyers to construct an alternative all-cash proposal from a single entity for the acquisition of Smithfield.

He adds that additional time is needed "to complete the necessary work to convert the various non-binding indications of interest for pieces of Smithfield into a collective, alternative proposal to acquire all of Smithfield".

This can be achieved before 29 November, which is "the 'outside date' for the consummation of the Proposed Merger with Shuanghui.

The date of the Special Meeting of shareholders on 24 September is of critical importance, according to Mr Smith, since under the Merger Agreement the Board is only permitted to consider alternative acquisition proposals that are received prior to shareholder approval of the Proposed Merger at the Special Meeting.

"As a result of the foregoing, at this time we believe that our best course of action is tovote our shares ‘against’ the Proposed Merger," according to the letter.

"By voting ‘against’ the Proposed Merger at the Special Meeting on September 24, 2013, we are voting in furtherance of trying to compel Smithfield to postpone or adjourn the Special Meeting for a period of time to allow it to continue, soliciting votes in favour of the Proposed Merger.

"To be clear, this course of action would not give Shuanghui the ability to terminate the Merger Agreement since such right would only arise upon the conclusion of the Special Meeting without the Proposed Merger having received shareholder approval."

"By our voting in such a manner to trigger a postponement or adjournment of the Special Meeting, we are seeking additional time, if needed, to submit an alternative proposal to the Board at a substantially higher value than the Proposed Merger."

Mr Smith's letter to other shareholders concludes: "Given the mechanics of the Merger Agreement and the fact that we have already received written indications of interest for each of Smithfield’s assets, which in the aggregate imply a total value for Smithfield at a price substantially in excess of the $34 cash deal with Shuanghui, we strongly believe that voting ‘against’ the Proposed Merger is our best course of action at this juncture."

According to South China Morning Post, in June, Starboard estimated Smithfield's value at between US$9 billion and US$10.8 billion, or about US$44 to US$55 per share.

Also in June, Shuanghui was reported to have received US$7.9 billion in loans from Bank of China and Morgan Stanley for its acquisition of Smithfield Foods.

This latest move by one of its larger shareholders could impact Smithfield's position in the market, coming as it does just days ahead of the publication of the company's first-quarter 2014 report on 6 September.