Shuanghui

Shuanghui Group
双汇集团
Private with public subsidiary
Industry Food
Founded 1958
Headquarters Luohe, Henan, People's Republic of China
Area served
 People's Republic of China
Key people
 Chairman: Mr. Wan Long
Products Meat
Revenue $6.24 billion (2012)
Number of employees
 60,000
Subsidiaries Henan Shuanghui Investment & Development (Shuanghui Development)
Smithfield Foods
Website WH Group
Shuanghui Development

Shuanghui Group (Chinese: 双汇集团; pinyin: Shuānghuì jítuán),[1] or WH Group (Chinese: 万洲国际; pinyin: Wànzhōu guójì) is a privately owned Chinese meat processing company headquartered in Luohe, Henan, China.[2][3] Also known as Shineway Group in English-speaking countries, the company's businesses include hog raising, consumer meat products, flavoring products, and logistics.[4] Owning Shuanghui Development and Smithfield Foods, it is the largest pork producer in the world,[5] and the largest meat producer in China.[6]

Shuanghui has 13 facilities that produce more than 2.7 million tons of meat per year.[1] It slaughters more than 15 million pigs a year, but only raises about 400,000 – the rest are purchased from suppliers.[7][8] It had revenue of US$6.24 billion in 2012.[8] The company holds more than 500 patents and produces 1,000 different products.[3]

Wan Long (Chinese: 万隆), nicknamed China's "number one butcher" because of the large number of pigs the company slaughters, is the chairman of Shuanghui.[8] As of May 2013, Zhijun Yang is the managing director.[1] The company employs over 60,000 people and is 30% employee owned.[3][7]

History

Shuanghui was set up by the local Luohe city government in 1958 as a single processing plant.[7] Wan Long was appointed chairman in 1984.[7] Under Wan, the company has expanded aggressively. In his first year, he turned around a struggling company, bringing it from a net loss to a net profit of 5 million yuan ($1.7 million).[6] The company introduced its first branded meat product to the market in February 1992. Later that year, Shuanghui formed a joint venture with 16 institutional investors across six countries.[3] In 1994, the venture was incorporated as Shuanghui Group.[9] Shuanghui subsidiary Henan Shuanghui Investment & Development Company Limited (SZSE: 000895) was established and listed on the Shenzhen Stock Exchange in 1998.[7][10] In 2000, Shuanghui started a post-secondary educational-work research division.[3]

By 2006, Shuanghui was the largest (by company value) food processor in China, and 131st largest company overall. The company was valued at $1.3 billion, and controlled more than 50% of China's high-temperature processed meat market at that time.[9] That year, Luohe government sold its share of Shuanghui to a joint venture of Goldman Sachs and private equity firm CDH Investments.[11] Goldman Sachs later sold most of its share, reportedly for a large profit.[8]

In 2011, state-owned CCTV revealed that Shuanghui pork contained clenbuterol, a banned chemical that can be harmful to humans.[1]

Mergers and acquisitions

On 29 May 2013, Shuanghui announced it would purchase American pork producer Smithfield Foods, Inc., for $34 per share, or approximately US$4.72 billion total. Including assumed debt, the total value of the deal is about $7.1 billion. The agreed purchase price represents a 31% premium over Smithfield's market price at the time of the deal.[1] The businesses had been in discussion for four years before they were able to come to terms.[8]

Before it can be finalized, the deal will have to be approved by U.S. Committee on Foreign Investment, a process that takes about 75 days, and Smithfield shareholders.[1] However, The Wall Street Journal said deal "unlikely to face serious opposition" from regulators.[2] "The administration clearly has a public policy of open arms – it's hard for me to believe that there are going to be many speed bumps in this transaction," said U.S. China Economic and Security Review Committee member Michael Wessel.[2] Several congressman expressed concerns over the purchase, but stopped short of saying they would oppose it.[2]

To allay potential concerns about food safety, Smithfield CEO Larry Pope stated the deal would "[preserve] the same old Smithfield, only with more opportunities and new markets and new frontiers."[1] No Chinese pork would be imported to the United States, he stated, but rather Shuanghui desired to export American pork. There is a growing demand for foreign food products in China due to recent food scandals.[1] Smithfield's existing management team would remain intact and no major changes to its workforce would occur.[1] Analyst Derek Scissors said companies such as Shuanghui are "not looking to cause any trouble in the American market ...They want to gain from what the U.S. is able to do."[1] China has been a net importer of pork since 2008.[8]

If completed, the deal will be the largest ever takeover of a U.S. company by a Chinese company.[1] It will roughly double the number of US jobs tied to direct investment by China.[7] The previous largest takeover was Dalian Wanda Group's acquisition of AMC Theaters for $2.6 billion.[6] Smithfield will cease to be publicly traded at the deal's completion.[1]

It was announced in July 2013 that Shuanghui planned to list Smithfield on the Hong Kong Stock Exchange after completing the takeover. The IPO would see the firm valued at around $4 billion.[12]

References

  1. 1 2 3 4 5 6 7 8 9 10 11 12 Chapman, Michelle (29 May 2013). "China's Shuanghui buying Smithfield Foods for about $4.72 billion, taking company private". Associated Press. Retrieved 2013-05-29.
  2. 1 2 3 4 "Opposition to China-Smithfield Deal Seen as Muted". The Wall Street Journal. 29 May 2013. Retrieved 30 May 2013.
  3. 1 2 3 4 5 "About Shuanghui". Shuanghui International Holdings Limited. Retrieved 31 May 2013.
  4. ↑ Paul Davidson; Elizabeth Weise (29 May 2013). "China's Shuanghui in $4.7B deal for Smithfield". USA Today. Retrieved 3 June 2013.
  5. ↑ "Corporate Profile". Official website of WH Group. Retrieved 29 December 2015.
  6. 1 2 3 Joe McDonald (31 May 2013). "China's entrepreneurs expand global presence". Charlotte Observer. Associated Press. Retrieved 3 June 2013.
  7. 1 2 3 4 5 6 Clifford Coonan (4 June 2013). "Shuanghui International buys world's biggest pork producer". Irish Times. Retrieved 4 June 2013.
  8. 1 2 3 4 5 6 "Pigs will fly". Economist. 1 June 2013. Retrieved 1 June 2013.
  9. 1 2 Zhang Lu (4 March 2006). "Henan meat processor Shuanghui up for sale". China Daily. Retrieved 31 May 2013.
  10. ↑ Henan Shuanghui Investment & Development
  11. ↑ Shen Hu; Li Qing. "Off the Chopping Block, Onward for Shuanghui". Caixin Online. Retrieved 17 May 2013.
  12. ↑ Saeed Azhar and Stephen Aldred (16 July 2013). "Exclusive: Smithfield's China bidders plan Hong Kong IPO after deal - sources". Reuters.
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