Smithfield Foods' Chinese Parent Succeeds in IPO

July 31, 2014
Second attempt nets $2 billion to lower debt from 2013 acquisition.

WH Group Ltd., the Chinese meat processor that bought Smithfield Foods last year, on July 29 raised $2.05 billion in an initial public offering of stock meant to ease some of the debt it took on in that $7.1 billion acquisition.

It was WH Group's second attempt at an IPO, with the first one, intended to raise $5 billion, withdrawn from the Hong Kong stock exchange in April. Financial reports said the Asian market was weak at the time and WH Group may have been overly optimistic about its own worth.

The Wall Street Journal reported the July 29 IPO price "represents 11.5 times forward 2014 earnings, rather than the 15 times to 20.8 times implied by the price range set in the original attempt." The Chinese company sold 2.57 billion shares at 6.20 Hong Kong dollars (each worth about 80 U.S. cents). WH Group has an option to sell additional shares after listing, which would raise the total to $2.36 billion. It plans to list on the Hong Kong Stock Exchange on Aug. 5, according to the Journal.

Smithfield Foods, the world's biggest pork producer, was acquired Sept. 26, 2013 by Shuanghui International Holdings Ltd., which changed its name to WH Group Ltd. WH Group is the majority shareholder of Henan Shuanghui Investment & Development Co., which is China's largest meat processing enterprise and China's largest publicly traded meat products company.

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