Boston buzz: SENA overcome by M&A tidal wave

‘Everything everywhere all at once’ is not just the name of the movie that won best picture recently. It’s also an accurate description of last week’s Boston seafood show

Editor’s note: This is the first in a series of articles summarizing the recent Seafood Expo North America, otherwise known as the Boston seafood show. Tom Seaman, Louis Harkell, Matilde Mereghetti, NickSambides and Matthew Craze contributed reporting to this article.

“Everything everywhere all at once” is not just the name of the movie that won best picture recently at the 2022 Academy Awards. It’s also an accurate description of last week’s Boston seafood show, especially the incredible flurry of mergers and acquisition (M&A) activity.

No less than six major deals got announced during, just before or after the three-day event, March 12-14. Fortune International confirmed that it has agreed to acquire Boston Sword & Tuna (BST), for example, adding close to $300 million in sales to the Chicago, Illinois-based seafood import, processing and wholesale giant, taking it to over $ 1 billion in annual revenue.

Birgir Brynjolfsson, a partner at Antarctica Advisors, a Miami, Florida-based M&A consulting firm that represented BST in its sale process, counts several reasons for the M&A flood in and around the Boston seafood show.

“Several transactions were postponed in the second half of 2022 and, since the start of 2023, M&A activity has been picking up considerably,” he toldUndercurrent News in a recent email exchange.

“The Boston show this year was the first show since 2019 where people could prepare well in advance for the show, and the reason you had so many announcements come out this year is likely because people involved wanted to be able to share the news with their customers and suppliers in person,” he added.

The number of deals around Boston was “unusual”, Brynjolfssonacknowledged. He said that “despite higher financing costs and price volatility”, there is a need for both consolidation and succession in the seafood industry.

“There is also the belief that taxes in the US may increase in the near future,” he said. “Tax increases are bad for business owners that want to sell because they can both negatively impact valuations and leave the seller with lower after-tax proceeds. Many business owners are therefore considering accelerating their plans to sell before the window closes.”

China returned in force

The 41st edition of the Boston seafood show, more properly known asSeafood Expo North America (SENA), is over, but the six reportersUndercurrent sent to full-court press the event are still digesting what they heard and looking to provide even more coverage in coming days. This series of articles hopefully will give you a good sense of the most important things our team heard.

DiversifiedCommunications, thePortland, Maine-based company that organizes the three-day event every year, reported having 1,141 exhibitors from 49 countries between both SENAand Seafood ProcessingNorth America, a conference that it runs in conjunction with the main event at the Boston Convention Center. This year the overall exhibit space was expanded to 237,665 square feet, 31% more than in 2022.

The two events included new exhibitors from a multitude of countries, including Bahrain, Bangladesh, Hong Kong, Madagascar, Mauritius, Morocco, Pakistan, Papua New Guinea, Poland and Tunisia.

One of the biggest showings in Boston came from China, which sent 96 exhibitors to the event this year after not showing up last year due heavily to COVID-related travel restrictions. Of course, it was nowhere close to the 527 exhibitors in Boston from the US, though it was close to the 98 that came from Canada.

The 2019 edition of the Boston seafood show remains the largest in the event’s four-decade history, having included 1,359 exhibitors overall. Several attendees told Undercurrent that this year’s show was among the biggest and most active they’ve ever experienced. Recall that the 2020 and 2021 expos were canceled due to pandemic concerns, and the 2022 show was considerably tamer, with only about 830 exhibitors, as reported by Undercurrent at the time.

Darrell Roche, senior vice president at Whitecap International SeafoodExporters, a Saint John’s, Newfoundland and Labrador-based distributor of Canadian seafood, said his booth at the 2023 show was the busiest its been in its 20 years of presence at the event.

“There was a big turnout due to the void left for customers and suppliers during COVID,” he toldUndercurrent. “Given inflation and the tougher markets in certain species, the Boston seafood show[was] the perfect venue for all stakeholders to be in one place together.”

Steve Harmell, the owner of Green Zone Seafood, a wholesaler based in Pembroke Pines, Florida, said he’s been going to the Boston show for four decades, and the crowd at the 2023 event was among the largest he’s ever seen there.

Several attendees have told Undercurrent in the past that Boston is where prospective seafood sales contacts are made before deals are closed during Seafood Expo Global, an even bigger event in Barcelona, Spain, April 25-27, this year. But Harmell disagreed, saying Boston often serves as the finish line in sales, and he’s had many contracts signed there.

Also, it’s a great place for companies to showcase new products, he said.

“The importance of this show is, without a doubt, to see and be with the folks that you’ve come to know over the years and share thoughts, ideas, successes, failures, and meet new people that you can do business with going forward,” he said. “I’ve seen companies grow the size of their exhibits to attract more attention, and I’ve seen new products shown that have gone on to be stable items in retail and food service.”

Succession planning a common trend

The M&A deals announced in and around Boston represented a wide variety of transaction types, from wholesalers looking to gain more regional territory to processors adding species to their product mixes. But Brynjolfsson noticed one thing that many of the deals had in common.

“Succession planning seems to be the common trend in most transactions announced recently and we expect to see that trend continue,” he told Undercurrent, adding a prediction for the future: “Cross-border transaction activity slowed down during the pandemic, so it would not be a surprise if we start seeing more cross-border transactions in 2023.”

In fact, what happened in Boston could be just the tip of an M&Aiceberg due to a worsening economic environment and rising borrowing costs, suggested Jason Brantley, senior vice president at Bank of America, and John Doucette, executive vice president and head of commercial banking at M&T Bank, during a presentation mid-March 14 at the Boston show, as reported by Undercurrent.

Many family-owned companies have a leadership continuity problem because of second and third-generation owners who are either ill-equipped or don’t want to run a seafood company, Doucette said. Some have had assets up for sale for several years but have held out for attractive valuations; they may have missed the window as worsening conditions force sales.

“Deals that were available a few years ago are some of the same deals that are out there now, but the rising rate environment is going to force some of the companies to sell, or they are going to have to consider bringing in partners,” Brantley said. “There is a valuation gap.”

A tick-tock recap of the deals

The torrent of M&A activity happened so fast last week that it was hard to keep up. It actually started on March 11 — the day before the Boston seafood show — when Carson, California-based SouthwindFoods, an importer and processor, confirmed that it had inked a deal to acquire Caito Fisheries, a processor with four locations on the sameWest Coast US state, as reported by Undercurrent.

Southwind president Sam Galletti told Undercurrent that it was his plan to double or even triple Caito’s output, providing it with, among other things, stronger financing to buy more of its key species, including Dungeness crab, salmon, black cod, halibut and rockfish, in addition to Dover and Petrale sole.

In addition to announcing the deal, Southwind, which trades as GreatAmerican Seafood Import Co., revealed plans to build a 40,000-square-foot processing, storage and distribution facility in Salt Lake City, Utah, and a 60,000sf cold storage facility in Vernon, California.

A second deal got announced in Boston the next day, on March 12, when Peter PanSeafood, a processor based in the US state of Alaska, revealed that it signed a letter of intent for an asset purchase ofTrapper’s Creek Smoking Co., a smoked salmon producer. The deal includes a smokehouse facility in Anchorage, Alaska, and its brands: Copper River Smoking Company, Alaska’s Best, Trapper’s Creek and Eat Like a Grizzly.

Peter Pan’s turnover has increased by a multiple of about three to nearly $400m since Rodger May and two US investment firms acquired the company from Japan’s Maruha Nichiro, the largest seafood company in the world, in early 2021, May told Undercurrent in Boston.

Peter Pan canceled its booth for SENA 2022 as concerns grew around the omicron COVID-19 strain. So, this year was the first time the company had a booth as a standalone entity.

“It’s been a coming out party for the new Peter Pan. I’ve been flat out all day, than having two dinners each night,” May said, adding that the response has been “amazing”.

On March 13, $1bn-turnover Ecuadorian shrimp supplier Omarsakept the M&A partygoing by announcing that it had snapped up Altrix de Panama, a plant in Aguasdulcesthat the acquiring company said it plans to upgrade to “Ecuadorian standard”. That includes installing equipment to produce individual quick frozen (IQF)head-on shrimp and peeled IQF shrimp.

Omarsa also plans to expand its vannamei shrimp farming operations in Panama, having acquired 1,200 hectares a few years earlier.

Also, on March 13, Sealaska, an Alaska-native corporation and the US parent of UK-based processor New England Seafood International(NESI), announced that it has grabbed a majority stake in Normarine, a Norwegian cod and haddock supplier. The deal gives NESI closer access to Norwegian whitefish raw material than it already has with Iceland.

The mother of all M&A deals in relation to Boston, of course, was the one announced by private equity-backed Fortune on March 13. That was the acquisition of BST, the prospects for which were first reported by Undercurrent on Feb. 8. The deal is expected to close in the next 60 days, based on a press release from Fortune.

sale in food service and retail. The company also has a salmon burger program, according to its website.

Then, on March 14, $2.5bn-turnover Canadian seafood giant Cookeannounced another blockbuster, revealing that it had entered into a”binding purchase agreement” to acquire Slade Gorton & Co., a prominent US processor based in Waltham, Massachusetts, close to Boston, as reported by Undercurrent.

The M&A news kept coming after the Boston seafood show was over, too, on March 16, when the Madrid, Spain-based news service ElConfidencial reported that acquisitive US-based seafood conglomerate Red Chamber Group had joined Cooke in entering negotiations to acquire a majority stake in Spain’s Nueva Pescanova from ABANCACorporacion Bancaria, the lender that owns a 97% stake in the company. The bank has reportedly offered both companies a flexible financing structure that allows them to plan a complete takeover of the fishing and aquaculture giant.

Red Chamber, Zhenye grew organically, too

Of course, not all of the recent expansion in seafood has been by acquisition. Red Chamber corporate communications manager Valentina Bragagnolo also revealed at the Boston show that her company has commissioned two new fishing vessels to grow its shrimp volumes in Argentina.

Another company looking to expand organically is Chinese tilapia processor Hainan Qinf, which told Undercurrent in Boston that it expects to complete a new CNY 500m ($72.4m) factory by 2025. The plant, which will process up to 500 metric tons of tilapia daily, will replace Qinfu’s existing factory near Wenchang, which processes and exports mainly tilapia fillets for North America and Europe.

The facility will produce more value-added convenience products, like pickled tilapia, grilled tilapia and tilapia bites, mainly for the Chinese domestic market, the company toldUndercurrent.

Also, Zhenye Aquatic, a Chinese processor of farmed whitefish species, told Undercurrent that it’s installing at least two new production lines this year at its facility in Guangdong to produce value-added products for China’s domestic market and export sales in Asia.

Jimmy Chan, deputy general manager of the company, said Zhenyewill add at least two and possibly even four processing lines this year to its existing eight lines. The lines will process locally farmed tilapia, barramundi, Japanese seabass, red drum and catfish.

Zhenye exports 600 containers of finfish products a year but the aim is to expand domestic sales where growth potential “is much bigger”.Aside from being a huge market on its doorstep, China’s value-added demand is growing strongly amid the trend toward convenience.

Same faces in new places

Another thing that happens in Boston every year is that the seafood industry gets introduced to some new faces, but more often, it sees familiar faces with new employers.

There were quite a few big executive moves made in advance of this year’s event.

One of the most high-profile of names to change teams before Boston was Jason Paine, who was recently named the new president of Veitnam-based barramundi farmer AustralisAquaculture, as reported by Undercurrent. Paine previously served for almost 20 years as general manager of US operations for Chilean salmon farmer Multi X.

Another familiar face to change outfits just before the Boston show was Mario Pullara, who was hired by Beaver Street to beef up foodservice sales. Pullara most recently worked for Red Chamber-owned Aqua Star, but he also has been employed by Marubeni’sEastern Fish (two years) and Tampa Maid Fisheries (13 years).

If you were looking for Carey Dougherty, the national sales manager for foodservice at Salisbury, Maryland-based Handy Seafoods, at the Boston show, you needed to head over to the East Coast SeafoodGroup booth instead. Starting this month, she’s the senior national sales manager for New Bedford, Massachusetts-based East Coast after serving four years at Handy, including 18 months in the national sales leadership role and two years and four months as a regional sales manager.

Also worth mentioning is the recent hire by Illex Fishing, an Argentine firm owned by a Chinese investor, of Tomas Gerpe to serve as its general manager. Gerpe was Argentina’s fisheries and aquaculture for three years (2015-2017) before recently joining Illex.

Illex holds a fishing fleet of four squid jiggers, two processing factories in Mar del Plata and PuertoMadryn, and cold storage in Puerto Mardel Planta. It exportsIllex squid, Argentine red shrimp, hake and yellow croaker, among other species.

Yet another big staffing change that got attention in Boston was the promotion of Sidney Azambuja to director of strategic sourcing at RedLobster, the world’s biggest seafood restaurant chain. Azambuja, who got the move up following the exit of Joe Zhou to Slade Gorton & Co., talked to Undercurrent about how he sees the price and supply situation for farmed shrimp as leading to a return to long-term contracts.

“During the pandemic, we went short on contracts. We have to, with all the uncertainty,” he said. “Then, it went to six months, then nine, and now it looks like we can go back to longer contracts.”

The majority of Red Lobster’s shrimp comes from India, butAzambuja, who is Brazilian and also fluent in Spanish, is looking to “get back into Ecuador” for sourcing, he revealed.

Before moving to Red Lobster in 2013, Azambuja worked for USimporter and processor King & Prince Seafood for 10 years, dealing with Latin American shrimp suppliers.


SOURCE: Undercurrent News
PHOTO: Seafood Expo North America 2023. Credit Tom Seaman