The Wall Street Journal: WH Group seeks up to $6 billion from Hong Kong IPO

By Yvonne Lee and Prudence Ho

HONG KONG — The Chinese pork producer that made headlines last year with the acquisition of Smithfield Foods Inc. started meeting investors Monday with plans to raise up to $ 6 billion in its Hong Kong initial public offering, aimed at repaying the debt it took on to buy the Virginia-based company.

Dmitry Kalinovsky /

WH Group Ltd, which renamed itself from Shuanghui International Holdings, started a premarketing process for its $ 5 billion-$ 6 billion offering Monday and is seeking to sell shares at 20 times its 2014 forecast earnings, people familiar with the IPO said. Shuanghui spent $ 4.7 billion, excluding debt, to buy Smithfield. With debt included, Smithfield’s price tag was $ 7.1 billion. Shuanghui borrowed $ 4 billion from Bank of China /quotes/zigman/1873420/realtime CN:601988 +0.39%  to fund the transaction.

One fund manager called the IPO valuation “fair.” Global meat companies including U.S’s Tyson Foods Inc. /quotes/zigman/244186/delayed/quotes/nls/tsn TSN +1.99%  and Hormel Foods Corp. /quotes/zigman/227790/delayed/quotes/nls/hrl HRL +1.80%  are trading at an average of 17.4 times forecast earnings. WH’s own meat-unit, Shenzhen-listed unit Henan Shuanghui Investment & Development Co. /quotes/zigman/1865858/realtime CN:000895 +3.67%  , which has a market value of $ 13.4 billion, is trading at 17.7 times of 2014 forecast earnings, according to Capital IQ.

WH Group’s valuation range will be set on April 10, when the company begins taking orders from investors, the people said.

The listing by WH Group, planned for April 29 on the Hong Kong Stock Exchange, comes just seven months after Shuanghui International Holdings bought Smithfield for $ 4.7 billion in September, in the biggest takeover so far by a Chinese company of a U.S. firm.

An expanded version of this report appears on .

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CN : China: Shanghai

Volume: 42.52M

March 31, 2014 3:04p

Market Cap

¥732.70 billion




Volume: 3.25M

March 31, 2014 4:02p

Market Cap

$ 14.68 billion

Rev. per Employee

$ 302,817




Volume: 955,207

March 31, 2014 4:06p

Market Cap

$ 12.78 billion

Rev. per Employee

$ 448,392



CN : China: Shenzhen

Volume: 6.44M

March 31, 2014 3:01p

Market Cap

¥83.40 billion

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