China's WH Group, the world's biggest pork company, has cancelled its planned Hong Kong IPO as a downturn in equity markets weighed further on demand even after it cut the offer size by two-thirds.
The decision is a setback in the company's effort to cut the large debt it took on to seal the $4.9 billion acquisition of Smithfield Foods last year.
It also caps a tumultuous four weeks for WH Group, during which the company and its bankers faced mounting questions from investors skeptical of paying top valuation in the IPO without clear signs of cost savings from the combination with Smithfield, sources involved in the deal have said.
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"In light of deteriorating market conditions and recent excessive market volatility, the company, having consulted the joint sponsors, has decided that the global offering will not proceed at this time," WH Group said in a securities filing late on Tuesday.
The company last week slashed the offer size by two-thirds. This was a result, fund managers and bankers said, of WH Group and its owners seeking too high a price, hiring too many underwriters - a record 29 - as well as negative publicity over some sky-high executive compensation.
It also had bad luck as sentiment towards new listings slid worldwide.