KKR Buys into Fujian Sunner, Major PRC Chicken Producer

Fujian Sunner Development Co. Ltd., a vertically integrated chicken meat producer, and global investment firm KKR have announced the signing of a definitive agreement under which KKR will invest approximately $400 million for an 18% stake in the Fujian, China-headquartered company. Sunner and KKR will form a strategic partnership to expand the poultry specialist’s operations to provide safe, high-quality products to Chinese consumers. The transaction is subject to customary approvals.

Sunner is the PRC’s largest breeder, processor and supplier of chicken, providing value-added frozen and non-frozen products to the nation’s quick service restaurant sector, food manufacturing industry and meat wholesale markets. Among its clients is the McDonald’s chain.

While chicken is the fastest-growing protein in China, it represents only 17% of total meat eaten on the mainland, versus nearly 40% in Taiwan and Hong Kong. Per capita chicken consumption in the PRC, at 10 kilograms per year, is very low level compared to 43 kilograms in the United States.

There is a trend towards big scale chicken breeders supplying the market. China’s large volume producers account for only 30% of total supplies today. While this is a significant increase from 12% in 2007, it’s still quite low compared to the USA, where over 95% of the supply comes from large scale producers.

kkr-logoFu Guangming, chairman of Sunner, said: “Chicken is the most efficient form of animal protein, and the market for high quality chicken products is expected to remain strong. We look forward to leveraging KKR’s global resources and operational expertise to further strengthen our market leadership, and to meet the growing domestic demand for chicken that meets both quality and safety standards.”

“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,” said Julian Wolhardt of KKR.

About Fujian Sunner Development
Sunner DevelopmentFujian Sunner Development Co. Ltd., which is listed on the Shenzhen Stock Exchange, has been dedicated to white feather broiler production for over 30 years. Through a network of vertically integrated facilities, it has oversight of the full production chain, ranging from chicken farming and the management of feed mills to processing.

According to Dun & Bradstreet data, the company reported sales of 4.71 billion Renmimbi (US$ 766.30 million) for the year that ended in December of 2013. This represents an increase of 14.9% over sales of 4.10 billion Renmimbi in 2012. Sales rose during each of the previous five years, and since 2008 revenues have increased by 273%.