News update:Mar 9, 2016

Partnership to promote safe chicken production in China

Fujian Sunner Development, a leading vertically integrated chicken meat producer in China and leading global investment firm KKR have signed a definitive agreement under which KKR will invest approximately $400 million for an 18% stake in Sunner.

Sunner and KKR will form a strategic partnership to expand the Company's operations to provide safe and high-quality chicken products to Chinese consumers.

Sunner is China's largest breeder, processor and supplier of chicken products, providing fresh and frozen chicken for China's fast food industry, food manufacturing industry and meat wholesale markets. Through its vertically integrated facilities, Sunner has oversight of the full production chain, ranging from chicken farming to the management of feed mills to processing, which better ensures safe and quality food products.

Chicken is the fastest-growing protein in China, yet it represents only 17% of its total meat consumption, versus nearly 40% in Taiwan and Hong Kong. Per capita chicken consumption in China is 10kg per year, at a very low level compared to 43kg in the US. There is also a trend towards large-scale chicken breeders supplying the market. China's large-scale producers only account for 30% of total supplies today, a significant increase from 12% in 2007, but still very low compared to mature markets like the US, where over 95% of supply comes from large-scale producers. Large-scale, integrated farming is the foundation to ensure food quality and safety standards are met.

Fu Guangming, Chairman of Sunner, said: "Chicken is the most efficient form of animal protein, and the market demand for high-quality chicken products is expected to remain strong. We are very excited to bring in a world leading investment firm such as KKR as our long-term strategic investor, as we share the same commitment to provide the best quality and safest food products to Chinese consumers. We look forward to leveraging KKR's global resources and operational expertise to further strengthen Sunner's market leadership, and to meet the growing domestic demand for healthy chicken."

"Vertically integrated chicken farming is a key solution to the food safety threats facing China's animal protein sector. Sunner has an excellent track record and has thoughtfully constructed its farms and processing facilities at strategic locations to ensure chicken quality and health. It is a unique company within its industry with an outstanding management team and we look forward to partnering with Sunner as it expands its operations to meet the increasing consumer demand for safe high-quality protein," added Julian Wolhardt, Member of KKR.

The transaction is subject to customary approvals.

World Poultry

Or register to be able to comment.