By KELVIN CHAN, Associated Press
HONG KONG (AP) — China's WH Group, the world's biggest pork company, said Tuesday it is shelving its multibillion-dollar Hong Kong IPO as investor demand sags amid rocky financial markets.
In a brief statement posted on the Hong Kong stock exchange's website, the company said that "in light of deteriorating market conditions and recent excessive market volatility" the global stock offering "will not proceed at this time."
WH Group became the world's biggest pork company after buying Smithfield Foods of the U.S. last year and the decision to abandon the share sale complicates its efforts to pay off loans used to complete that purchase.
The Chinese company, which changed its name from Shuanghui International Holdings, had initially planned to raise up to $5.3 billion in an initial public offering on Hong Kong's stock exchange.
Most of the proceeds were intended to be used to pay off the debt from the Smithfield takeover, which was valued at $7.1 billion, including $4.7 billion in cash. But news reports indicated that investors were lukewarm on the offering, forcing bankers to cut the size of the deal before scrapping it altogether.
According to its prospectus, WH Group planned to source cheap, high quality hogs from the U.S., where pork consumption is leveling off, to feed growing demand for pork in China, where rapid growth in the world's second biggest economy means millions more can afford to buy the staple meat.
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