Picture: 123RF/SERG GRIGORENKO
Picture: 123RF/SERG GRIGORENKO

A bitter family row between the chair of WH Group and his son over succession and management issues has wiped out more than $2bn of market value in the world’s largest pork processor. 

Shares of WH Group in Hong Kong have plunged 17% in two days to the lowest in almost three years after an article purportedly written by Wan Hongjian, the 52-year-old son of the company’s founder and top shareholder Wan Long, accused his father of financial misconduct. Henan Shuanghui Investment & Development, its mainland-listed unit, also slumped. 

The article, posted on Tuesday on the WeChat account of New Meat Industry, alleged that Wan senior failed to disclose $200m in taxable income, which WH Group has denied. The report came days after the 80-year-old Wan stepped down as CEO, handing over to CFO Guo Lijun. The group owns US pork supplier Smithfield Foods, which it acquired in 2013. 

The accusations are “untrue and misleading”, WH Group said in a statement on Wednesday. The company added that it reserves the right to take legal action against the younger Wan or any other people responsible for the allegations.

In the article widely cited by Chinese media, Wan Hongjian also questioned the capabilities of new CEO Guo in trading and management. Wan Long expressed confidence in Guo’s appointment during a media briefing last week, adding that he will  assist with a smooth transition. WH Group didn’t respond to an email seeking further comment. 

The younger Wan was removed from his role as director and vice-president in June. WH Group cited “misconduct” for his termination, adding that he demonstrated “aggressive behaviour” towards the company’s properties and was unable to fulfil his duties as director of skill, care and diligence.

The market has been overconcerned about the effect of Wan Hongjian’s allegations, according to Citigroup, saying the focus should be on the group’s plan to buy back about $1.9bn worth of its shares, which has become unconditional. The bank reiterated its buy call on the stock amid expectations for a business recovery in the second half, as well as easing concerns over the management transition.

The new generation of top management were all “promoted from within” and have a long, proven track record with the company, Citigroup analysts including Xiaopo Wei said in a note. The new leaders include Guo and Wan Hongwei, the younger son of Wan Long, who’s been appointed as deputy chair. 

Bloomberg News. More stories like this are available on bloomberg.com

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