Henan-based pork producer and processor WH Group said that it had doubled down its investments in Poland in a bid to strengthen its foothold in continental Europe, while continuing its foray into chicken and pork segments.
The Hong Kong-listed company said in a filing on 11 Aug. that it had agreed to buy the 66.5% stake it did not already own in Pini Polonia, which operates a hog slaughterhouse in Kutno in central Poland, from the Pini Group through its wholly-owned U.S. subsidiary Smithfield Foods.
The deal, which is subject to antitrust clearance, is set to mark WH Group's takeover of all the Poland-based facilities of Pini Group, following its buyout of Pini Polska, Hamburger Pini and Royal Chicken in June for an undisclosed sum. Outside of Poland, Pini Group's only other operations are processing plants in Italy and Hungary.
The deal will also add to the existing four production facilities that WH Group has in Poland through Animex Foods, Agri Plus and Agri Plus Feed. Controlled by Smithfield's Polish arm, the three meat producers altogether employed over 9,000 employees in the country and were in close partnerships with over 2,300 pig farmers there.
"Central Europe is actually short of pork whereas the rest of Europe is long [on] pork. So the overall big picture in Europe is that it's a very good place to be in animal agriculture," Kenneth Sullivan, CEO of Virginia-based Smithfield Foods, told reporters. "Our intention is to grow that business significantly in that part of the world, not just to serve the central European market, but ultimately all world markets."
He noted that the deal with Pini Group would allow the company to "significantly" increase its capacity in packaged meat, then in fresh meat should the second phase of the acquisition be completed. "I think it has the opportunity to more than double the profits, and even triple the profits, of that business from the 2016 base point," said Sullivan, referring to WH Group's fortunes in Europe.
"Apart from pork, we will also expand into other types of protein production such as beef and chicken meat," said CEO and chairman Wan Long, adding that the company would continue to pursue mergers and acquisitions in the near future.
Known as Shuanghui previously, WH Group took then New York-listed Smithfield private for $4.7bn in 2013 before it went public in Hong Kong the following year. The merger catapulted the Chinese company, founded in 1958, to become the world's largest pork producer and processor.
Source: Nikki Asian Review