WH Group Limited: Initial Public Offering Road Show
(12 pages of text)
An equity research analyst is preparing to attend a road show presentation by WH Group Limited, the world’s largest pork company headquartered in Hong Kong, concerning its upcoming initial public offering. She is reviewing the preliminary prospectus as well as other publicly available background information on the company and its two core subsidiaries, Shuanghui International Holdings Inc. and Smithfield Foods Inc., whose recent acquisition was the largest by a Chinese company of a U.S. firm. She wants to assess the prospects for the company as a whole and arrive at her own independent valuation to support a buy or no buy recommendation for her fund. Her analysis includes assessments of economic conditions and the pork industry in the United States and China and the perceived strengths and weaknesses of WH Group, including the issue of large bonuses to corporate executives and the benefits or risks of the recent acquisition.
This case can be taught in an undergraduate or MBA corporate finance course. Its objectives are:
- To apply discounted cash flow and comparable analysis techniques.
- To assess an acquisition, including synergies.
- To size up the economy, industry and company from a qualitative perspective.
- To assess the growing importance of business in China and the global impact of Chinese investments.
- To learn about the IPO process, including road shows.
- To learn about the pork industry.
China; United States, Large, 2014
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