Monday, March 04, 2013

Some Zhongpin, Inc. (HOGS)

I picked up a few shares in Zhongpin, Inc. (Ticker: HOGS) today at $12.78. This is one of those Chinese management buyout plays. The take out price for this deal is $13.50 in cash. This deal will probably close by the end of April, but I’m factoring in a conservative close date of May 31st when calculating the annualized return. If all goes well, this should generate a net return of 5.63% (annualized return of 22.77% assuming a May 31st close). This is just a small position (~ 4.5% of my portfolio).


At March 05, 2013, Anonymous Anonymous said...

What would you say is the probability of this deal going through? Would you put at it 100% or close it?
What do you see as the worst case scenario?

At March 05, 2013, Blogger Money Turtle said...

This deal obviously has the China discount associated with it. I do like the odds as it has debt financing commitments in place from the China Development Bank, which has funded a number of these going private transactions. I've never seen a deal break with debt commitments from the China Development Bank. I would place the odds of this deal closing at ~ 90%. Worst case scenario... deal breaks and wouldn't be surprised to see $8-9.

Now just waiting for the Definitive Proxy Statement to be filed...


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