Fujian Sunner has announced plans to fully acquire Sun Valley Foods (Anhui) Ltd., previously Cargill’s protein business in China. This acquisition enhances Sunner’s footprint in the white-feather broiler market and exemplifies the company’s commitment to vertical integration and market leadership.
On December 20, 2024, Fujian Sunner Development Co., Ltd. announced its plan to acquire a partial stake in Sun Valley Foods (Anhui) Ltd. This includes a 51% stake from DCP Capital and a 3% minority share from a company executive. Upon completion of the transaction, it will hold 100% of the equity in the target company.
The parties have agreed to set the transaction price based on the total equity value reported in the evaluation after completing the 2024 assessment of the target company. Under the terms of the agreement, the total equity transfer price must be no less than 12 times the projected net profits attributable to the seller’s share of the equity, provided the target company’s 2024 audited consolidated net profits reach at least CNY 170 million (~USD 23.3 million). The maximum transfer price is capped at CNY 1,125.9 million (~USD 154.3 million). At this upper limit, the valuation of the target company would be 2.79 times its consolidated net assets as of September 30, 2024, based on unaudited figures.
Operational Synergy and Strategic Alignment
Sun Valley’s recovery and expansion over the past year have highlighted its potential. A notable 149% year-on-year rise in net profit reflects the success of cost optimization efforts and a 40% production increase. With an annual processing capacity of 65 million birds and an output of 90,000 tonnes of food products, Sun Valley offers Sunner an immediate boost in production capacity.
The acquisition aligns with Sunner’s 14th Five-Year Plan objectives, focusing on mergers and acquisitions to expand white-feather broiler production and reduce risks associated with upstream investments. This move allows Sunner to solidify its presence in the high-demand Yangtze River Delta region while creating operational efficiencies across its vertically integrated supply chain.
A Decade of Transformation
Originally established by Cargill in 2011, Sun Valley was a USD 550 million investment aimed at serving major fast-food brands, including McDonald’s and KFC. Following its divestiture to DCP Capital in 2023, the stage was set for Sunner to step in and drive further growth.
Sunner now aims to reduce funding costs, enhance operational efficiency, and fully integrate Sun Valley’s capabilities. By leveraging Sun Valley’s infrastructure, Sunner reinforces its dominance in the domestic broiler market.
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