WH Group Smithfield Spin-off (IPO) Notes

 

July 26, 2024 Notes

On July 14, 2014, WH Group ( SHSC: 288) announced that it will be spinning off its US and Mexico pork business (Smithfield) through an IPO. The stock is expected to trade on the NYSE or the Nasdaq.

This Bloomberg article suggests the company looks to raise up to $1BN. The WSJ writes: “Virginia-based Smithfield is the largest U.S. pork producer, slaughtering roughly 30 million hogs a year. WH Group acquired Smithfield in 2013 in a $4.7 billion deal that marked one of the biggest takeovers of an American business by a Chinese company at the time.

The IPO comes at an interesting time in the pork processing industry. 2023 was difficult as the pork market was oversupplied and grain costs were elevated. 2024 is expected to be better given lower livestock feed prices.

Given that this will be an IPO (no indiscriminate selling pressure) not a spin-off (WH Group is expected to maintain a majority stake in Smithfield), I don’t think this is actionable/interesting by itself. However, Maple Leaf Foods (MFI) is spinning off its pork business and Smithfield will be a good comp for Maple Leaf’s pork spin-off.