Chinese hog producer Zhengbang to sell feed assets to Dabeinong
The sale will lead to full ownership in three companies, majority stakes in five others
28 February 2022
2 minute read
By: Struggling Chinese hog breeder Jiangxi Zhengbang Technology has agreed to sell eight of its animal feed units to Beijing Dabeinong Technology for between 2 billion yuan ($317.13 million)and 2.5 billion yuan, reported Reuters.
Under the deal, announced late on Monday, Dabeinong will take full ownership of three of the companies, and a 51% stake in five others.
China's No. 2 hog producer, Zhengbang said it is short of cash after a major expansion during 2020 left it vulnerable to last year's dramatic plunge in hog prices.
In January it said it expected to report annual losses of almost 20 billion yuan for 2021, the worst performance among all listed peers.
Last month it announced an agreement with a local government-backed infrastructure group to fund some of its feed purchases.
The planned sale includes full ownership of Deyang Zhengbang, Danling Zhengbang and Chongqing Guanglian, as well as majority stakes in five Zhengbang subsidiaries based in the southwestern provinces of Yunnan and Guizhou.
The eight companies had combined net profits of more than 200 million yuan in the first three quarters of 2021, according to Reuters calculations based on Zhengbang's stock exchange statement.
Dabeinong is one of China's top feed producers and also raises pigs and sells seed.
The company told investors this month it wanted to have a 10% share of the feed market in the near term and 20% in the mid-to-long term.
It forecast a loss of between 230 million yuan and 450 million yuan for 2021.
