Friday, January 3, 2014


Spanish meats group Campofrio gets new foreign owners

Mexican frozen food company Sigma and Shuanghui International Holdings of China have signed an agreement to share ownership of Spanish meat processor Campofrio (CPF.MC), cooling hopes of a bidding war.

Campofrio brand products are seen in the display of a supermarket in Pontevedra, northern Spain, November 14, 2013. REUTERS/Miguel Vidal
Campofrio brand products are seen in the display of a supermarket in Pontevedra, northern Spain, November 14, 2013.

The deal, which values Campofrio at 700 million euros ($957 million), is the latest in Spain by Latin American buyers keen to tap into an economic turnaround and among only a handful of commitments by Chinese companies in major listed Spanish firms.

Campofrio's shares hit a 52-week high this month on expectations that Shuanghui would make a higher bid after Sigma's November takeover offer of 6.8 euros per share.

Shuanghui inherited a 37 percent stake in Campofrio, a household name in Spain as the leading producer of canned ham and hot dogs, when it bought U.S. pork producer Smithfield in September.

Under the deal reached on Monday, Sigma will join its 45 percent stake in Campofrio with Shuanghui's holding and launch a raised 6.9 euros a share bid for the remaining stock, to be delisted from the Madrid stock exchange.

Campofrio's shares fell 7 percent to 6.98 euros by 1300 GMT, just above the offer price. Trading in the shares, which had been suspended before the market opened, resumed after the announcement.

"This agreement throws out the possibility of a counterbid from Shuanghui which had been rumored in the market in recent weeks and the improved offer is still below Friday's share price," Banco Sabadell said in a note to clients.


Still, the deal underscores foreign buyers' renewed interest in Spain as a stepping stone to other European markets and where deals are closing as the country emerges from five years of economic crisis.

Among a slew of recent M&A moves, Mexican and Colombian buyers have taken stakes in Spanish banks Popular (POP.MC) and Sabadell (SABE.MC), Mexico's state-owned oil firm Pemex has bought 51 percent of a Spanish shipyard, and China's HNA Group has acquired 24 percent of hotel chain NH Hoteles (NHH.MC).

For Sigma, part of Mexican conglomerate Alfa (ALFAA.MX), the deal opens the possibility of taking well-known brands such as Fud and Nochebuena from the United States and Latin America into Europe, where both it and Shuanghui said they wanted to solidify Campofrio's leading position.

"Latin American investors are finally certain that Spain has touched bottom, and the country represents a natural gateway to expand in Europe," said Enrique Quemada, head of Madrid-based M&A adviser ONEtoONE Capital Partners.

"Large chains are particularly attracted to the food sector, which has tangible assets and low debt," Quemada said.

Campofrio, which also sells frozen pizzas, had 1.4 billion euros of revenues in the nine months to September and 473 million euros of debt. Its debt to underlying earnings ratio of 3.2 times is low for Spanish companies after leveraged buying sprees in the pre-crisis years.

Campofrio's shares trade at an EV/EBITDA ratio of 9.07, below an average of 9.86 for the Spanish foods sector, according to Thomson Reuters data.

Chairman Pedro Ballve, whose family founded Campofrio in 1952 as a canned foods group before expanding into meat products in Spain and across Europe, will remain on the company's board.
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