China's WH Group Aims to Raise US$5.3B in HK IPO

WH Group Limited, which became the world's biggest pork company after buying Smithfield Foods Inc. of the U.S. last year, has announced a Hong Kong initial public offering of as much as US$5.3 billion.

 

WH Group changed its name from Shuanghui International Holdings after acquiring Smithfield. Two senior executives of the group received a combined US$600 million payout for helping the Chinese company seal the US$4.9 billion takeover of Smithfield, an unusually high incentive for an acquisition. The bonus, disclosed in a public filing, is equivalent to just over 12 percent of the amount WH Group paid for Smithfield, according to Reuters.

 

The Chinese goup's listing would be the world's second-biggest ever food and beverage IPO after Kraft Food Inc's US$8.7 billion deal in June 2001.  Most of the money raised from the IPO will be used to pay off the debt used to buy Smithfield.

 

The global offering initially consists of an aggregate of 3,654,980,000 offer shares, of which 3,472,231,000 shares will be offered under the international offering and 182,749,000 shares will be offered under the Hong Kong public offering.

 

In addition, certain existing shareholders of the company intend to grant to the Hong Kong Underwriters and the International Underwriters, according to the Hong Kong Underwriting Agreement and the International Underwriting Agreement, an offer size adjustment option to sell an aggregate of up to 20% of the initial number of offer shares available under the global offering and certain existing shareholders of the company also intend to grant to the international underwriters, according to the International Underwriting Agreement, an over-allotment option to sell an aggregate of up to 15% of the initial number of offer shares available under the global offering.

 

The indicative offer price will range between HK$8.00 and HK$11.25 per offer share. With the mid-point of the indicative offer price range being HK$9.63 per offer share, the company’s net proceeds from the global offering would amount to approximately US$3,553 million.

 

 

The Hong Kong public offering will open at 9:00 a.m. on Tuesday, April 15, 2014, and will close at 12:00 noon on Tuesday, April 22, 2014. The offer price is expected to be determined on Tuesday, April 22, 2014 and the allotment results are expected to be announced on Tuesday, April 29, 2014. Trading of the Company’s shares on the HKEx is expected to commence on Wednesday, April 30, 2014 under the stock code 288. Shares will be traded in board lots of 500 shares.
 

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