WH Group shares plunge after major shareholder CDH plans stake sale

PUBLISHED : Friday, 28 October, 2016, 12:44pm
UPDATED : Friday, 28 October, 2016, 2:33pm

WH Group, the world’s largest pork producer, saw its shares plunge the most in more than two years on Friday morning after the company said private equity group CDH Investments planned to curb its stake by selling HK$10.6 billion through a share placement.

It dropped as much 9.1 per cent to HK$6.28. The benchmark Hang Seng Index edged down 0.38 per cent to HK$86.6 as of 11:22am. The proposed share sale was reported by the Post on Thursday.

The company said on Friday the PE firm expected to sell 1 billion of its shares at HK$6.25, representing a 7.95 per cent discount against Thursday’s closing price, according to a filing to the Hong Kong stock exchange.

The share placement would see CDH’s holding in the company drop to 12.94 per cent from 19.77 per cent. CDH may cash out of a further 4.76 per cent stake in WH Group, known as China’s No 1 butcher, cutting its holding to 8.18 per cent.

CDH is the second largest shareholder in WH Group, with a 19.77 stake. It is one of the largest alternative asset management houses in China with over US$16 billion under management, according to its website. It was founded by a group of former veterans of the private equity unit of CICC, China’s first joint venture investment bank.

Companies in its investment portfolio include shoemaker Belle International, China Mengniu Dairy and white goods maker Midea.

Smithfield Foods, WH Group’s major asset and subsidiary, announced on Tuesday a 73 per cent jump in profit for the first nine months.

WH Group logged a better-than-expected 26.98 per cent surge in net profit for the first half of the year, boosted by a product-mix upgrade and effective cost cutting.