KKR & Co. LP’s share price up, to acquire the Chinese meat-processing unit of Cofco Group in a 270-million-dollar deal

A person familiar with the process reported that the private equity firm KKR & Co. LP agreed to purchase a stake in the Chinese meat-processing division of Cofco Group through a group led by it, including Baring Private Equity Asia, Hopu Investment Management Co. and Boyu Capital. According to the person, the deal is estimated at about 270 million dollars.

The person with knowledge of the acquisition, who asked not to be named because the terms of the deal have not been revealed, said that the company is paying 150 million dollars for its shares in Cofco Meat Investment Co. The investment made by KKR and the group led by it, is focused on building and managing the industrialised farming and meat processing operations of Cofco Meats unit.

The acquisition, which would be the third investment made by KKR & Co. LP in China, comes at a moment when the country is trying to consolidate its agribusiness segment and make its food supplys quantity and quality more secure.

Currently, the meat-processing division of Cofco Group is one of the biggest hog manufacturers in China. The unit owns a great variety of operations, which according to its statement help “to produce high-quality meat products to address increasing food safety issues”.

The Chairman of Cofco – Mr. Ning Gaoning commented on the acquisition for the Financial Times, saying: “Meat is the single-largest food category in China’s diet, and meeting this demand is a critical link and a natural extension of our company’s value chain. Bringing in the four strategic investors is an action by COFCO to diversify our equity ownership and enhance our corporate governance.”

Mr. Steve Okun, who is a spokesman of KKR refused to make any comments on the situation.

KKR & Co. LP was 0.30% up to close at 23.71 dollars per share yesterday, marking a one-year change of +29.56%. According to the information published on CNN Money, the 14 analysts offering 12-month price forecasts for KKR & Co. LP have a median target of 28.00, with a high estimate of 33.00 and a low estimate of 25.00. The median estimate represents a +18.09% increase from the last price of 23.71.