Owned by the Luohe city government, Henan Shuanghui Investment & Development, a unit of Henan Shuanghui Group, filed an announcement with the Shenzhen Stock Exchange stating that a Hong Kong company representing Goldman Sachs and CDH Investment would sign a stake transfer agreement with the local branch of the state-owned assets supervision administration commission.
Goldman Sachs and CDH won a bid to purchase a 100 per cent stake in Henan Shuanghui for CNY2.01 billion (€196m).
However a spokesman at Goldman Sachs told AP-Foodtechnology.com that being named the preferred bidder did not mean that the sale was yet agreed.
"All that has been announced are the results of the auction. We still have to agree terms of the sale, sign the contract and carry out all due diligence," he said.
The private equity partners already hold a 13 per cent stake in China Yurun Food Group, the country's second meat and poultry processor, which reported a 112.3 per cent rise in its net profits last year to CNY359 million on the back of a 72 per cent sales increase to CNY4.45 billion.
The Shanghui Group's sales came in at more than CNY20 billion during 2005, although net profit was lower than Yurun at CNY107.3 million, thanks to a CNY81.2 million operating loss for the year.
Strong sales at the meat processors are being driven by rapidly rising meat consumption in China, which has foreign investors increasingly interested.
China has already been the world's biggest meat producer since 1992, even though its per capita meat consumption is currently much lower than the 70-130kg consumed by people in developed countries.
But research by Brower & Waldron predict that total annual meat consumption in China, largely pork, could rise to 60kg per person by 2020, compared with 33kg currently by city-dwellers and 18kg a person in rural areas.
The Luohe state-owned assets supervision and administration commission is expected to require that Goldman Sachs and CDH do not associate with other meat processors in China and continue to develop the Shuanghui brand, which is valued at CNY10.6 billion.
