WH spreads wings with Campofrio stake deal

A meat production line of Shuanghui International Holdings Ltd in Luohe, Henan province. The company changed its name to WH Group in January to solidify its leading position in the global pork industry. Jin Yuequan / For China Daily

Move with Mexico firm will enhance Chinese pork producer's global reach

China's largest pork producer WH Group Ltd and Mexico's leading food producer Sigma Alimentos SA have acquired a 98.3 percent stake in leading Spanish packaged meat company Campofrio Food Group SA de CV, a move to enhance WH's global expansion.

Sigma will own 61.3 percent of the company, with WH Group holding 37 percent.

WH Group is the largest pork company in the world as well as in individual markets such as China, the United States and key markets in Europe. The group conducts its operations through Henan Shuanghui Investment and Development Co Ltd and Smithfield Foods Inc, the largest pork company in the US.

Campofrio manufactures and sells its products in eight European countries and the US. Last year, Campofrio reported sales of 1.9 billion euros ($2.59billion).

James Roy of the China Market Research Group said the deal gives WH a stronger position in overseas pork production, which will be important as demand for meat in China continues to grow.

He said Chinese food companies are acquiring managerial experience and learning international practices through the acquisition of established foreign brands. A similar pattern is being seen in the dairy industry in China.

Acquisition of foreign companies is another way for Chinese companies to expand their global operations and acquire more premium products, said Roy.

Xiang Jianjun, a researcher with CIConsulting, said the move will enhance WH's domestic market position. It's likely that Campofrio products will enter the Chinese market through WH's distribution channels, Xiang said.

Shuanghui International Holdings Ltd changed its name to WH Group in January to solidify its leading position in the global pork industry.

Wan Long, chairman and chief executive officer of WH, said that the renaming reflected the increasingly global reach of the company's operations.

WH's subsidiary, Henan Shuanghui Investment and Development Co Ltd, reported first-quarter operating income of 10.2 billion yuan, up 5.5 percent year-on-year. Net profit was up 42 percent to 1.07 billion yuan ($174 million).

In its first-quarter report, Smithfield Foods, a wholly owned subsidiary of WH, said sales rose 3 percent year-on-year to $3.4 billion.