Activist hedge fund Starboard Value LP said it is working with investors interested in paying "substantially" more for Smithfield Foods Inc than the price China's Shuanghui International Holdings Ltd had agreed to.

Starboard, a New York-based fund that holds a 5.7 percent stake in Smithfield, said in a letter to the company's shareholders on Tuesday that it had received "nonbinding written indications of interest" from other parties willing to pay more than the $34 per share cash deal proposed by Shuanghui.

While the counter-proposal was not completed, the hedge fund said it planned to vote against the Smithfield-Shuanghui merger later this month in order to buy more time to get such a bid finalized.

Virginia-based Smithfield, the world's largest pork producer, has scheduled a special shareholder meeting on September 24 to vote on the proposed acquisition by Shuanghui. The deal, struck in May and valued then at about $7.1 billion including debt, would be the biggest takeover of a U.S. company by a Chinese one.

The U.S. government said in late July it would take a further 45 days to review Shuanghui's plan to purchase Smithfield.

Some U.S. lawmakers have voiced concerns a takeover of Smithfield by a Chinese firm could hurt U.S. food safety and raise prices for American consumers. Other have said it could affect the safety and availability of heparin, a blood thinner derived from pig intestines that is widely used in heart surgery and kidney dialysis.

Starboard, which has argued that Smithfield could be sold for more if its assets were split, said in July that it had hired Moelis & Co. and BDA Advisors Inc. to advise the hedge fund as it searched for buyout firms to form a rival bid. Starboard had approached investment firm Blackstone Group LP and other meat processors, including Tyson Foods Inc, according to an August 9 report by Bloomberg.

While the portent of a U.S.-based group of owners may appeal to critics of a Chinese takeover, some industry analysts say it could be challenging to derail the Shuanghui-Smithfield deal at this point.

Shuanghui International Holdings Inc announced in a statement Tuesday morning that it has secured about $4 billion in loans from a group of eight banks as part of the financing it needs to fund the Smithfield deal. The news prompted D.A. Davidson & Co. analyst Timothy S. Ramey to write in a research note on Tuesday that "the acquisition of Smithfield by Shuanghui International Holdings looks reasonably certain."

Shuanghui and Smithfield declined to comment on Starboard's move to find rival buyers. Starboard, Blackstone Group and Tyson Foods could not be reached for further comment on Tuesday.

Starboard said it would vote against the merger in part to get Smithfield to push back the September 24 special meeting, as the company's board of directors is "only permitted to consider alternative acquisition proposals that are received prior to shareholder approval" of the Smithfield-Shuanghui merger at the meeting.

According to the terms of the proposed deal, it must be closed by November 29. The terms of the deal also allow Smithfield to delay the special meeting set for later this month if the pork processing giant cannot garner enough votes in favor of Shuanghui's bid, according to Starboard's 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," Starboard wrote in the letter.

The hedge fund acknowledged that if a more lucrative acquisition bid could not be finalized and presented, it would vote in favor of the Shuanghui bid.

Smithfield is scheduled to report its fiscal first quarter 2014 results on Friday. Executives may discuss a recent push for expansion of its domestic swine operations, say industry analysts.

Smithfield's hog production unit, Murphy-Brown LLC, is part of a trio of companies that won a bid last month to buy the U.S. operations of bankrupt hog farmer AgFeed Industries Inc. in a deal valued at $79.2 million. Murphy-Brown is poised to acquire AgFeed's North Carolina-based hog producing facilities and some of its Iowa operations, according to documents filed in Delaware bankruptcy court.

Shares of Smithfield were up 0.6 percent at $33.74 in morning trading.

(Reporting by P.J. Huffstutter. Additional reporting by Aditi Shrivastava in Bangalore, India.; editing by Andrew Hay)