The Wall Street Journal reports,"The Chinese pork producer that made headlines last year with the acquisition of Smithfield Foods Inc. started meeting investors Monday with plans to raise up to US$6 billion in its Hong Kong initial public offering, aimed at repaying the debt it took on to buy the Virginia-based company.
WH Group Ltd, which renamed itself from Shuanghui International Holdings, started a premarketing process for its US$5 billion-US$6 billion offering Monday and is seeking to sell shares at 20 times its 2014 forecast earnings, people familiar with the IPO said. Shuanghui spent US$4.7 billion, excluding debt, to buy Smithfield. With debt included, Smithfield's price tag was US$7.1 billion. Shuanghui borrowed US$4 billion from Bank of China to fund the transaction.
One fund manager called the IPO valuation "fair." Global meat companies including U.S's Tyson Foods Inc. and Hormel Foods Corp. are trading at an average of 17.4 times forecast earnings".
