Leading Taiwan food conglomerate Uni-President Enterprises plans to spin off its mainland Chinese business in a Hong Kong IPO worth up to US$700 million, sources familiar with the deal said on Thursday.
The listing firm, Uni-President China Holdings, won approval in principle on Wednesday from the Hong Kong Stock Exchange for its initial public offering, a source said.
The spin-off will include the production and distribution of Uni-President's food and beverage businesses in China, one of the sources said, adding that the initial public offering would raise between US$400 million and US$700 million.
Shares in Taiwan's Uni-President jumped 6.97 percent to T$47.6 on Thursday, and are up 45 percent in the last three months. The company intends to kick off its marketing roadshow on Nov. 26 and plans to list in the middle of December, with Morgan Stanley and UBS the sponsors of the deal.
Uni-President has been aggressively expanding its presence in China's food and beverage market, where it competes against the world's top soft-drink makers, Coca-Cola Co and Pepsico Inc and others such as Taiwan-invested Tingyi (Cayman Islands) Holdings Corp.
Several Taiwan companies have chosen to list their mainland Chinese subsidiaries in Hong Kong to get around Taiwan's ban on its companies putting more than 40 percent of their capital into mainland China.
However, recent Taiwan company listing in Hong Kong have not performed well in the secondary market.
Chinese meat processor DaChan Food Asia , a unit of Great Wall Enterprise (Taiwan) Cox, has seen its stock drop 21 percent since it raised US$115 million in an IPO last month.
Delta Networks, a spin-off from Taiwan's Delta Electronics, which raised US$181 million in July, is down 33 percent from its IPO price.
Taiwan-based shoe maker Stella International, which raised US$388 million, has seen its shares rise about 6 percent since its Julyl listing.
(Reporting by Kennix Chim; editing by Dominic Whiting)