* Sigma, Shuanghui reach agreement to control Campofrio
* Sigma to delist Campofrio shares after deal
* Campofrio shares down 7 percent
By Tracy Rucinski
MADRID, Dec 23 Mexican frozen food company Sigma
and Shuanghui International Holdings of China have signed an
agreement to share ownership of Spanish meat processor Campofrio
, cooling hopes of a bidding war.
The deal, which values Campofrio at 700 million euros ($957
million), is the latest in Spain by Latin American buyers keen
to tap into an economic turnaround and among only a handful of
commitments by Chinese companies in major listed Spanish firms.
Campofrio's shares hit a 52-week high this month on
expectations that Shuanghui would make a higher bid after
Sigma's November takeover offer of 6.8 euros per share.
Shuanghui inherited a 37 percent stake in Campofrio, a
household name in Spain as the leading producer of canned ham
and hot dogs, when it bought U.S. pork producer Smithfield in
Under the deal reached on Monday, Sigma will join its 45
percent stake in Campofrio with Shuanghui's holding and launch a
raised 6.9 euros a share bid for the remaining stock, to be
delisted from the Madrid stock exchange.
Campofrio's shares fell 7 percent to 6.98 euros by 1300 GMT,
just above the offer price. Trading in the shares, which had
been suspended before the market opened, resumed after the
"This agreement throws out the possibility of a counterbid
from Shuanghui which had been rumoured in the market in recent
weeks and the improved offer is still below Friday's share
price," Banco Sabadell said in a note to clients.
FOOTPRINT IN EUROPE
Still, the deal underscores foreign buyers' renewed interest
in Spain as a stepping stone to other European markets and where
deals are closing as the country emerges from five years of
Among a slew of recent M&A moves, Mexican and Colombian
buyers have taken stakes in Spanish banks Popular and
Sabadell, Mexico's state-owned oil firm Pemex has
bought 51 percent of a Spanish shipyard, and China's HNA Group
has acquired 24 percent of hotel chain NH Hoteles.
For Sigma, part of Mexican conglomerate Alfa, the
deal opens the possibility of taking well-known brands such as
Fud and Nochebuena from the United States and Latin America into
Europe, where both it and Shuanghui said they wanted to solidify
Campofrio's leading position.
"Latin American investors are finally certain that Spain has
touched bottom, and the country represents a natural gateway to
expand in Europe," said Enrique Quemada, head of Madrid-based
M&A adviser ONEtoONE Capital Partners.
"Large chains are particularly attracted to the food sector,
which has tangible assets and low debt," Quemada said.
Campofrio, which also sells frozen pizzas, had 1.4 billion
euros of revenues in the nine months to September and 473
million euros of debt. Its debt to underlying earnings ratio of
3.2 times is low for Spanish companies after leveraged buying
sprees in the pre-crisis years.
Campofrio's shares trade at an EV/EBITDA ratio of 9.07,
below an average of 9.86 for the Spanish foods sector, according
to Thomson Reuters data.
Chairman Pedro Ballve, whose family founded Campofrio in
1952 as a canned foods group before expanding into meat products
in Spain and across Europe, will remain on the company's board.