Family feud wipes US$2b from market value of China meat giant

Hong Kong

A BITTER family row between the chairman of WH Group and his son over succession and management issues has wiped out more than US$2 billion of market value in the world's largest pork processor.

Shares of WH Group in Hong Kong have plunged 17 per cent in two days to the lowest in almost three years after an article purportedly written by Wan Hongjian, the 52-year-old son of the company's founder and top shareholder Wan Long, which accused his father of financial misconduct.

Henan Shuanghui Investment & Development, its mainland-listed unit, also slumped.

The article, posted on Tuesday on the WeChat account of "New Meat Industry", alleged that Wan senior failed to disclose US$200 million in taxable income, which WH Group has denied. The report came days after the 80-year-old Mr Wan Long stepped down as chief executive, handing over to chief financial officer Guo Lijun.

The group owns US pork supplier Smithfield Foods, which it acquired in 2013. The accusations are "untrue and misleading", WH Group said in a statement on Wednesday. The company added that it reserves the right to take legal action against the younger Mr Wan or any other persons responsible for the allegations.

In the article widely cited by Chinese media, Mr Wan Hongjian also questioned the capabilities of new CEO Mr Guo, in trading and management. Mr Wan Long expressed confidence in Mr Guo's appointment during a media briefing last week, adding that he will assist with the smooth transition.

WH Group did not respond to an email seeking further comment.

Mr Wan Hongjian was removed from his role as director and vice-president in June. WH Group cited "misconduct" for his termination, adding that he demonstrated "aggressive behaviours" towards the company's properties and was unable to fulfil his duties as director of skill, care and diligence.

The market has been overconcerned about the impact of Mr Wan Hongjian's allegations, according to Citigroup, saying that the focus should be on the group's plan to buy back about US$1.9 billion worth of its shares, which has become unconditional.

The bank reiterated its buy call on the stock amid expectations for a business recovery in the second half, as well as easing concerns over the management transition.

The new generation of top management are all "promoted from within" and have a long, proven track record with the company, Citigroup analysts said in a note.

The new leaders include CEO Guo and Wan Hongwei, the younger son of Wan Long, who has been appointed as deputy chairman. BLOOMBERG