Blog: Is Chinese meat company WH Group eyeing US M&A?
Katy Askew | 6 May 2016
Rumours Chinese pork giant WH Group is eyeing acquisitions, particularly in the US, have surfaced.
WH Group, which did not respond to requests for comment, became the world's largest pork processor when it acquired US firm Smithfield Group in 2013. Over the past two years, the Hong Kong-listed meat firm has focused on paying down debt taken on to fund the Smithfield deal and integrating the US business's sizeable global operations.
When WH Group delivered its results for 2015 at the end of March, it was clear headway has been made on these objectives. The company has strengthened its financial position and “gradually revealed” synergies helped it deliver an expectation-beating 17.5% rise in net profit.
The company did, however, reveal sales came under pressure in a period marked by "challenging industry and macroeconomic environments". An answer to such concerns is to turn to M&A. Through acquisitions, WH Group could look to consolidate its lead in the global pork sector. However, according to analysts at BB&T Capital Markets, WH Group will more likely look to diversify its revenue stream.
“The company has increasingly been talking about global acquisition opportunities, with an eye on North America in addition to other regions. The company is looking to broaden its scope beyond pork,” the analysts wrote in a recent investor note.
The question then becomes which companies WH Group could be targeting. Is WH Group looking for a transformational strategic opportunity or a smaller bolt-on deal?
Within the US, BB&T suggested WH Group's comments "have implications" for Tyson Foods, Pilgrim’s Pride, Sanderson Farms and Hormel Foods. If WH Group is looking at North America more broadly, it seems probable Canada's Maple Leaf Foods could be added to this list.
A year after union officials alleged Fyffes abused workers on plantations in Central America - and called on the produce giant to be kicked out of the Ethical Trading Initiative forum - the company is...
Much of the chatter about where 3G Capital could look next has centred on packaged food - but might the private-equity fund be about to extend its foodservice empire?...
US snack maker Snyder's-Lance has invested in local natural and organic food specialist Natural Foodworks Group. ...
Headlines that Mead Johnson's board has backed Reckitt Benckiser's takeover bid will no doubt overshadow the other news on the group this week – that it is facing a US lawsuit from a “whistle blower” ...
Kantar Worldpanel issued its monthly supermarket share data in the UK this morning - and the numbers showed a change in the identity of the country's top five food retailers....
- Focus: Nestle CEO plan to balance sales, earnings
- Does Kraft Heinz want to swallow Unilever whole?
- Will Kellogg's DSD exit help it grow in US snacks?
- Comment: Meal kits in US - don't believe the hype
- Is Mondelez's margin target hurting sales?
- Nestle plans restructuring as 2016 profit misses
- Danone eyes efficiency, agility with new structure
- Kraft Heinz pursuing Unilever in takeover move
- Kraft Heinz returns to organic growth, ups margins
- Danone sales dampened by Europe, China