Ukraine Poultry Farm Sets IPO [WSJ]
Deal Will Be a Test Of Market's Fear About Rise of Bird Flu
By ALISTAIR MACDONALD
May 5, 2006; Page C14
A Ukrainian chicken farm is pushing ahead with an initial public offering of stock, in what is shaping up as a test of how seriously investors take the threat of a global bird-flu pandemic.
Financial markets overall haven't paid much attention to the prospect of a flu outbreak, although stocks in some other poultry companies have been hurt in the past year.
That could still be enough to dissuade Myronivsky Hliboproduct, known as MHP, from listing. But for now it is proceeding with its plans, which could see an IPO in the third quarter, people familiar with the matter say. The company has hired investment banks Morgan Stanley and Renaissance Capital to help raise about $150 million through an IPO in Kiev, and perhaps London, that could value the whole company at more than $1 billion, these people say.
"An IPO is one of the funding options being considered but no concrete details or timings have been confirmed at this stage," Yuriy Kosyuk, MHP's chief executive officer, says in an emailed statement.
The company would be launching shares as cases of the H5N1 avian-flu virus continue to emerge. This and other strains of the virus have appeared in birds in 45 countries and more than 100 people have died, mostly in Asia, from being in contact with infected birds. Some scientists fear that if the virus mutates to the point where it could be transferred easily between humans, it could spark a global pandemic.
As fears have grown, sales of chicken have dropped, though there isn't any evidence the virus can be passed on through cooked birds. The United Nations Food and Agricultural Organization predicts global poultry consumption will fall by three million tons, or more than 3%, this year.
Stocks in poultry businesses have tumbled. In the U.S., which has yet to see bird flu, shares of Pilgrim's Pride have dropped almost 25% in the past year, and Tyson Foods' stock is down almost 20%.
Mr. Kosyuk says MHP, which owns three large chicken farms in the Ukraine with capacity of 10 million chickens, hasn't been affected by bird flu and hasn't lost customers since the threat emerged. MHP, which sells chicken under the brand Nasha Ryaba, emerged in 1995 from the wreckage of post-Soviet Ukrainian chicken production.
"It is not evident that bird flu is an issue for markets at the moment," says Mike Lenhoff, chief strategist and head of research at broker Brewin Dolphin. "However, even given this, it does surprise me that a chicken farm would be listing now."
More broadly, many investors believe bird flu is too unpredictable to factor into broader market decisions. "It may be something, it may be nothing, and I don't think you can prepare your portfolio for that," says Leigh Harrison, head of United Kingdom retail funds at Threadneedle Asset Management in London.
Cherkizovo Group, a Russian meat processor, is also pressing ahead with its initial public offering, scheduled for this month in London. About 20% of its revenue comes from its poultry business. Morgan Stanley was hired to sell this IPO, too. Last week it resigned because the company was putting too high a price on itself, of up to $1.2 billion, a person familiar with the situation says.
Bird flu may have created an opportunity for Cherkizovo, which has told fund managers in London that a Russian ban on all import licenses for poultry will lead to a shortfall, which can be made up by homegrown chickens. Morgan Stanley and Cherkizovo decline to comment. |
