Nine big seafood M&A moves to watch for in 2019

By Jason Huffman, Tom Seaman and Jason Smith

The seafood industry has a fever and the only thing that will cool it down in 2019 is more consolidation.

To say there were a lot of mergers and acquisitions in 2018 would be an understatement. Undercurrent News has identified 127 deals, up from 117 in 2017 and 102 in 2016. The fourth quarter of 2018 alone saw 42 deals, the most since we started tracking in January 2015. The joint second-highest quarter for deals was Q3 of last year when we recorded 34, the same as in Q4 of 2017.

These deals include quite a few big ones in multiple sectors, from salmon aquaculture in Chile to fishing firms, processors, wholesalers and exporters in Europe, the US, Canada, and Asia. But the global M&A party is not nearly over based on the conditions, as suggested by Ignacio Kleiman, a managing partner at Antarctica Advisors, in Miami, Florida, in an earlier interview.

The borrowing environment is as good as it has been for a while for US seafood companies, for example, with lots of liquidity, low rates – under 5% a year – and other especially strong terms for five-year loans, the kind used to finance acquisitions in the industry, he told Undercurrent. Seafood company executives know this won’t last forever and they don’t want to miss their window, he said. If they plan to grow by acquisition, they can’t be assured that it will be as cheap to do so in two or three years.

Also, because of the recent consolidation, “the industry is becoming more and more competitive, so – while it’s nice to grow organically – companies need size and significance”, he said. “They are getting into other species, integrating, moving into fishing resources if they can, getting into value-added processing. They are under constant pressure from retailers and food chains.

So which companies will make big moves in 2019? Undercurrent’s team of experienced seafood journalists recently dug in and prepared this list. Look for more predictions soon on other changes we expect to rock the seafood world in the New Year:

#1: Glenn Cooke’s ‘Atlantic Canada-based powerhouse’

Glenn Cooke confirmed in December that the Canada-based, global seafood group that carries his family name was close to a deal for “one of the largest” shrimp farming companies in Latin America, which Undercurrent has previously reported is Honduras’ Seajoy Group. But he also said at a recent roundtable in his home province of New Brunswick that he was focused on offering more species and by getting closer to customers to better ensure the quality of his products.

And he told Undercurrent in an earlier interview that he sought to acquire more US downstream firms, though he already has several distribution centers and a feet of more than 100 long-haul transport trucks.

“We want to build an Atlantic Canada based powerhouse that can compete with the largest global, publicly traded seafood companies out there,” he said at the New Brunswick meeting.

#2: Iberconsa sale to make other M&A dominoes fall

Another big deal likely to close in early 2019 is the sale of Portobello Capital’s 55% stake in Spain’s Grupo Iberica de Congelados (Iberconsa), a vertically integrated harvester and processor of hake, squid and Argentine shrimp. US-based fund Platinum Equity is tipped as the most likely buyer.

If the sale does go through — some sources feel Portobello may not sell– there are several deals being lined up, according to Undercurrent’s sources. Iberconsa, which inked a deal for Argentina’s Grupo Valastro at the end of last year, adding two hake vessels and a squid jigger to its already expansive feet, is said to be looking at South Africa’s Irving & Johnson, up-for-grabs octopus processor Discefa and Pesquera Laurak Bat, a Spanish firm which operates a trawler catching cod and other whitefish.

Staying in Europe, look for action soon by Grupo Profand, which has taken control of US processor Stavis Seafoods using a Netherlands-based holding company. It’s been tipped to be investing in Seafreeze, an American squid and pelagic fishing firm. Undercurrent reported on this deal late last year, with sources expecting it to close soon.

#3: Someone to meet Young’s at the seafood merger altar

Sticking with private equity firms, keep an eye out for CapVest Partners to acquire Young’s Seafood, which has been struggling amid a tough climate in the UK in processing, with raw material inflation driven by the vote in favor of Brexit and rising prices. The PE has been tipped as the likely buyer.

CapVest’s plan, according to Undercurrent sources, is to combine Young’s with Karro Food Group, a pig processor it owns, inspired by Tesco meat packer Hilton Food Group’s deal for 􀃦sh processor Seachill UK.

However, the deal was said to be imminent as long ago as October and it still has not closed. That’s leading some sources to wonder if Young’s might be sold to another entity.

#4: The Dutch touch for shrimp, flatfish

Meanwhile, Dutch Seafood Company, the imaginative name for the merged entity of salmon smoker Foppen Groep and shrimp processor Klaas Puul Beheer, is reported to be on the lookout for deals. Also, the three big players in Dutch pelagic fishing, Parlevliet & Van der Plas (P&P), Cornelis Vrolijk and W. Van der Zwan, have all been making acquisitions Both P&P and W. Van der Zwan made moves in flatfish in 2018, investing in Dadas Groep and Ekofish Group, respectively. Van der Zwan also shares a flatfish-catching joint venture with Fish con Urk, owners of trader Fiskano. The joint venture, named Quotter, acquired Urk-based flatfish and whitefish processor Northseafood Holland in October 2017.

The move for Dadas marks P&P’s entry into flatfish and caps off a year in which it also announced a deal to acquire the German seafood distributor and marketer Deutsche See, as well as investing in Profish Food, via its shrimp processing subsidiary Heiploeg International, bought in 2014.

#5: Salmon giants being born in Chile

That’s not thunder you’ll be hearing soon in the South American nation of Chile. Rather, it’ll be the sound of giant salmon companies slapping their tail fins against the sides of net pens.

As reported by Undercurrent, Agrosuper is on the verge of a mammoth $850m deal for Empresas AquaChile. The pact, which is not yet closed, would create the world’s second-largest salmon farmer, behind Mowi, the new name for Marine Harvest.

How we got here: Agrosuper, which owns salmon farmer Los Fiordos, bought Friosur for $229m. AquaChile recently increased its girth, too, by acquiring Salmones Magallanes for $255m, carrying out a $340m capital increase to finance the deal and other investments.

With the salmon already in the water, the merged companies’ combined production within two years will likely reach 220,000-230,000t, sources predicted.

But wait…the deal is not yet closed, and the potential reason that’s the case could be even more interesting. Could it be that another prospective merger has driven up AquaChile’s price?

That’s the speculation following reports about an $880m bid by Chinese conglomerate Legend to acquire Australis, a smaller salmon farmer.

“What do the Chinese see? Did AquaChile make a bad deal? The fact that the Australis purchase exceeded AquaChile’s caught the attention of the financial sector considering that the company of [the Quiroga family,] is much smaller than that controlled by the Puchi and Fischer families [who are selling the majority stake to Agrosuper],” wrote El Mostrador, a Chilean newspaper.

#6: China’s insatiable salmon appetite

Legend’s move has another potential meaning, too. Sources say it could be the first of several Chinese companies, including investment conglomerate Fosun International, to make an acquisition play for large salmon holdings.

Talking to Undercurrent about Legend-owned Joyvio Group’s plan to buy Australis, Fan Xubing, founder of Beijing-based marketing and consulting firm Seabridge Marketing, tipped Fosun as one of several firms from China that could also look at salmon farming deals.

Other Chinese firms could, in turn, follow Joyvio’s lead and may also look to Norway, he said. As well as Fosun, he described Chinese feed firm New Hope Group and state-owned food conglomerate China National Cereals, Oils and Foodstuffs Corporation, known as COFCO, as the “main candidates”.

Fosun, which had 2017 turnover of CNY 88 billion ($13bn) and investments ranging from real estate, tourism and the UK’s Wolverhampton Wanderers football club, has recently added two former Legend executives to its team, with seafood acquisitions reportedly part of their remit.

But why stop with Chile and Norway? Legend is also looking at upstream seafood deals in Australia. Stay tuned!

#7 China Fishery process rumbling toward the finish line

News on the biggest deal of the year — at least in terms of likely valuation — could come as soon as April, although ticking all the boxes needed before ownership of Peruvian fishmeal and fish oil maker China Fishery Group remains an onerous task.

William Brandt, the US court-appointed trustee responsible for auctioning off the company, which boasts a 49 vessel feet, processing plants and the largest anchovy quota in Peru, hopes to sell it for at least $1.2bn. Bolstered by strong anchovy seasons, China Fishery is once again “printing money”, and had $110 million on hand in early October, the trustee told Undercurrent in November.

When the sale process — a product of the June 2016 bankruptcy of China Fishery’s parent company, Pacific Andes International Holdings (PAIH) — kicked off, Brandt said that some 89 firms had expressed some level of interest in buying China Fishery.

Lately, Brandt has seen interest diminish somewhat from sovereign wealth funds even as more private equity groups have come into the process alongside the many industry players said to be interested.

“The level of activity in connection with the sale has picked up substantially in the last four, five months,” Brandt said in November.

Sources previously told Undercurrent that potential China Fishery bidders could include Iceland’s Samherji and P&P, two fishing firms said to be interested in making a joint bid; Peru’s Group Brescia, which owns Tecnologica De Alimentos (Tasa); and the Dyer Coriat family, the owners of Peruvian shrimp and agribusiness group Camposol. Additionally, Qingdao, China-based marine ingredients firm Zhonghai Ocean Science & Technology and Russian fishing tycoon Dmitrii Dremliuga, also spelled Dmitry Dremlyuga, are also said to be interested.

Depending on the outcome of the sale, which could see bidding begin in April after buyers evaluate the outcome of the anchovy season, PAIH’s own assets such as Chinese whitefish processing, pollock trading, and Namibian mackerel harvesting could face sale or reorganization in a separate bankruptcy process.

#8: Premium, Fisher King to splash in cold Canadian waters

Back to Canada, where the cold is apparently pushing seafood companies closer together and Cooke isn’t the only one looking to make acquisitions. Keep an eye also on Premium Brands Holding Corp.

The Vancouver, British Columbia-based company went on an acquisition spree throughout 2018, spending CAD 740.1 million ($545.6m) to pick up most if not all of 10 food-related companies during the 􀃦rst three quarters of the year, including Ready Seafood, a large (15m lbs per year) lobster wholesaler and exporter based in Portland, Maine.

Premium’s note in the summary of a recent public filing assures that it’s not done growing in seafood, saying that “expanding the company’s very successful seafood model from western Canada and Ontario into the US and eastern Canada [is one of the] key drivers of the company’s expected top and bottom line growth” in 2019.

Another Canadian-based seafood wholesaler that can be expected to make an M&A splash soon is Fisher King.

Founder and CEO Tor Conklin and president Mark Powell reported buying back shares of the Halifax, Nova Scotia-based company from Japanese foodservice distribution giant Nichirei in late August to give themselves “increased flexibility and responsiveness in making strategic financial and operational decisions, including acquisition opportunities”.

Fisher King, which generates nearly CAD 300m ($220m) in annual revenue, is open to a wide range of investment possibilities, from upstream processors and harvesters with quota to downstream trading, logistics and distribution businesses, Conklin told Undercurrent during an August visit to his office.

#9: Mazzetta package still sitting on doorstep

Also reported to be in the market and looking for deals to take it well beyond its current position as a leading vertically integrated packager and importer of blue swimming crab is Blue Star Foods, in Miami, Florida. Such an expansion could closely follow the path taken by another Miami company, Bonamar, in 2017, when it made two big acquisitions and dramatically grew its presence with other species and in the western part of the US.

Blue Star founder John Keeler told Undercurrent recently that he was zeroing in on other species where his company could similarly introduce a culture of better environmental and economic sustainability.

Recall that Bonamar, by the way, told Undercurrent in August that it plans to proceed with the acquisition of another processor/importer, so watch for more action there, too.

As for other seafood companies we expect to be acquired in 2019, look for the Mazzetta Company, a massive wholesale operation (48th on Undercurrent’s 2017 list of top 100) with headquarters in Highland Park, Illinois, to announce a deal soon.

Sources told Undercurrent recently that founder and CEO Tom Mazzetta was making preparations, including staffing moves, as he was on the verge of selling his business to South Korea’s Dongwon Enterprise, the parent of StarKist & Co.

He has declined to comment in response to the reports. Also, it would not be the 􀃦rst time that Mazzetta was reportedly ready to sell before a deal fell through, according to sources.

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