Larger companies focusing on China’s livestock sector
Consultancy firm Deloitte has stated that the transformation of China's agriculture has attracted great attention in merger and acquisitions and the capital markets.
In a new report, quoted by China Daily, the consultancy company says that China's farming sector has seen many new entrants including financial investors, as a result of the sharply increasing demand for food products around the world. These investors might not have any experience with agriculture, the report states.
The report pointed to a number of Chinese agricultural giants having made acquisitions both locally and overseas – the best known example in the swine industry is likely to be Shuanghui which has taken over the US' largest pork processor Smithfield in 2013. These take overs seek further economies of scale and additional land resources.
Deloitte's research found that the plantation and livestock sectors have become the key merger and acquisition deal drivers in the country's agriculture. The report mentions some 149 agriculture mergers and acquisitions took place in China between the start of 2007 and the end of 2013. The 114 deals of which values are known had a total transaction value of US$13.7 billion.
Livestock-related deals respectively accounted for 18%, 29% and 60% of the inbound, domestic and outbound transactions.
Patrick Yip, international tax partner at Deloitte China, told China Daily that Chinese agricultural companies have become more vertically integrated in the value chain and the integration targets are no longer limited to those in domestic markets. He added that the Asian continent has traditionally been the most popular region for Chinese outbound investments, followed by the Americas, Africa, Europe and Australasia.
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