CHINA’S WH Group Ltd., the world’s biggest pork company, has cancelled its planned Hong Kong initial public offering (IPO) as a downturn in equity markets weighed further on demand even after it cut the offer size by two-thirds.

    The decision is a setback in the company’s effort to cut the large debt it took on to seal the US$4.9 billion acquisition of Smithfield Foods Inc. last year.

    It also caps a tumultuous four weeks for WH Group, during which the company and its bankers faced mounting questions from investors skeptical of paying top valuation in the IPO without clear signs of cost savings from the combination with Smithfield, sources involved in the deal have said.

    “In light of deteriorating market conditions and recent excessive market volatility, the company, having consulted the joint sponsors, has decided that the global offering will not proceed at this time,” WH Group said in a securities filing late Tuesday.

    The company last week slashed the offer size by two-thirds. This was a result, fund managers and bankers said, of WH Group and its owners seeking too high a price, hiring too many underwriters — a record 29 — as well as negative publicity over some sky-high executive compensation.

    It also had bad luck as sentiment toward new listings slid worldwide.

    WH Group, whose products include Smithfield ham and Farmland bacon in the United States, offered 1.3 billion new shares in a revised deal valued at up to HK$14.61 billion (US$1.9 billion).

    It had marketed the IPO in an indicative range of HK$8 to HK$11.25 per share.

    The IPO was cut last week from the original size of up to US$5.3 billion which involved WH Group and a group of shareholders including private equity firms CDH Investments and New Horizon, Goldman Sachs and Singapore state investor Temasek Holdings selling shares. (SD-Agencies)