UPDATE 1-Chinese pork giant WH Group pulls IPO due to weak demand - sources

Tue Apr 29, 2014 8:37am EDT

* Revised IPO of up to $1.9 bln pulled; no new dates set-sources

* WH Group's decision comes after slashing planned offer size (Adds IPO details, comments, underwriters)

By Elzio Barreto and Daniel Stanton

HONG KONG, April 29 (Reuters) - China's WH Group Ltd, the world's biggest pork company, has postponed its planned Hong Kong initial public offering (IPO) due to weak demand for the deal even after it cut the offer size by two-thirds, sources said on Tuesday.

The decision is a setback in the company's effort to cut the large debt it took on to seal the $4.9 billion acquisition of Smithfield Foods Inc last year.

It also caps a tumultuous four weeks for WH Group, during which the company and its bankers faced mounting questions from investors skeptical of paying top valuation in the IPO without clear signs of cost savings from the combination with Smithfield, separate sources have said.

WH Group declined to comment on the IPO plans when contacted by Reuters.

The company last week slashed the offer size by two-thirds. This was a result, fund managers and bankers said, of WH Group and its owners seeking too high a price, hiring too many underwriters - a record 29 - as well as negative publicity over some sky-high executive compensation.

It also had bad luck as sentiment towards new listings slid worldwide.

The company has postponed the deal without setting a new timetable, effectively pulling the IPO in its current shape, added the sources who declined to be named as they were not authorized to speak publicly on the matter.

"If market conditions improve, the deal might be revived at some point, but it's hard to set a date at this point in time," one of the sources said.

WH Group, whose products include Smithfield ham and Farmland bacon in the United States, offered 1.3 billion new shares in a revised deal valued at up to HK$14.61 billion ($1.9 billion).

It had marketed the IPO in an indicative range of HK$8.00 to HK$11.25 per share.

The IPO was cut last week from the original size of up to $5.3 billion which involved WH Group and a group of shareholders including private equity firms CDH Investments and New Horizon, Goldman Sachs and Singapore state investor Temasek Holdings selling shares.

WH Group, the world's No.1 pork firm by output, hired a record number of underwriters for the deal, surpassing the previous all-time high of 21 mandated for China Galaxy Securities Ltd's $1.1 billion IPO last year.

BOC International, Citic Securities International, DBS, Goldman Sachs, Morgan Stanley, Standard Chartered and UBS were hired as sponsors of the share offer.

Bank of America Merrill Lynch, Barclays, China International Capital Corp (CICC), Credit Suisse, Deutsche Bank, ICBC International, JPMorgan and Rabobank also acted as joint global coordinators, with another 13 banks hired as bookrunners.

($1 = 7.7532 Hong Kong Dollars) (Reporting by Elzio Barreto and Daniel Stanton of IFR; Editing by Denny Thomas and Pravin Char)

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