Chinese meat processing giant seeks expansion

China
Published:  09 June, 2017

WH Group Ltd, owner of Smithfield Foods, the world’s largest pork producer, is said to be seeking for U.S. and European beef and poultry assets so as to intensify competition with meatpacking rivals Tyson Foods and JBS. Although the company is seeking to diversify its portfolio, it says no deals are yet on the table and the targets have not been disclosed.

Some analysts say it is the good moment for prospection as, in May 2017, China and the U.S. reached agreement to resume U.S. beef imports, among other American products. Read more here. As reported by ILM, as JBS struggles with Brazil’s unprecedented bribery scandal, it announced on June 6 that it is selling its meat processing plants in Argentina, Uruguay and Paraguay for US$300 million. In 2008, Smithfield agreed to sell its U.S. beef operations to JBS for around US$565 million.

China’s WH Group acquired Smithfield in 2013 for US$4.7 billion and, as of end of 2016, it had bank balances and cash of US$1.14 billion as well as US$2.72 billion in unutilised banking facilities.

Reportedly, Smithfield could consider a vertically integrated model such as the one it has in the pork business for other meat segments. The company is said to own most of the hogs it slaughters along with processing plants. "For us, the next step to develop our business is to consider other sources of animal protein", Luis Chein, Director of Investor Relations, WH Group, told Reuters adding the Group would seek to buy assets such as slaughterhouses and processing plants in order to expand into the beef segment. He also said the company sees important room for growth in beef and poultry consumption in China.

Source: Reuters

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