When Shuanghui International lists in Hong Kong sometime in the next few months it will give the world a novel beast: a Sino-US pork giant worth up to $12bn. But this beast almost certainly would not have been created without the push of private equity.
Shuanghui’s bold $7.1bn takeover of Smithfield Foods of the US last year was a deal plump with strategic gains. China’s urban drift and embourgeoisement means more people want not only more meat, but also meat that is safer and with posher sounding foreign brand names.
Shuanghui, already China’s biggest pork producer with more pigs than Beijing has citizens, nailed three strategic imperatives with this deal. First, access to raw meat supply; second, the technology and knowhow to produce more pork more efficiently; and third, a string of popular US brands for meat, bacon and sausages.