Zhongpin Inc. (HOGS), a Chinese pork producer whose shares trade in the U.S., said it agreed to be acquired for about $502 million by Chairman and Chief Executive Officer Zhu Xianfu.
Golden Bridge Holdings and its Golden Bridge Merger Sub Ltd. unit, which are both owned by Zhu, will pay $13.50 a share for the 74 percent of the company they and other investors participating in the deal don’t already own, Changge, Henan- based Zhongpin said in a filing yesterday.
The offer is 47 percent more than the closing price on March 26, the day before Zhongpin said Zhu made a bid. The CEO has a 17 percent stake, according to data compiled by Bloomberg.
The deal will be funded with an $85 million equity commitment from China Wealth Growth Fund I LP and a $320 million loan from China Development Bank Corp. Under the terms of the merger agreement, Zhongpin has a so-called go-shop period ending Jan. 25 during which it can solicit other bids.
Zhongpin sells products in Beijing, Shanghai, Tianjin and Chongqing, as well as 20 Chinese provinces, according to the filing. It also says it had 3,447 retail outlets as of Sept. 30.
Zhongpin rose 15 percent to $12.50 in New York trading yesterday.
Skadden, Arps, Slate, Meagher & Flom LLP is legal adviser to the buyers and Credit Suisse Group AG is their financial adviser. Akin Gump Strauss Hauer & Feld LLP is the legal adviser to the special committee formed by Zhongpin’s board. O’Melveny & Myers LLP is legal adviser to the company.
The deal is expected to close in the first quarter of 2013, Zhongpin said. The agreement also includes a termination fee payable by Zhongpin of as much as $5 million and a similar fee of $12.5 million payable by the buyers.
The value of the deal was calculated based on the 37.2 million shares of Zhongpin that are outstanding as of Nov. 6, according to data compiled by Bloomberg.
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