With retail sales booming, processing consolidation will likely form the cornerstone of this year’s mergers and acquisitions (M&A) business, a trio of advisors told Undercurrent News.

Existing sector players, outside investors and alternative proteins are all likely to be pursuing closer retail access in the post-pandemic market, the M&A experts said.

When it comes to the processing sector, it’s here that you see the most fragmentation and the most family-owned businesses, according to Rabobank analyst Gorjan Nikolik. Combined with the

loss of demand for whole fish, that makes it an area ripe for consolidation.

“In recent times, retail has become really strategically important,” Nikolik told Undercurrent, noting that it had been difficult for companies to pursue major acquisitions during the pandemic.

“So 2021 will be potentially a year when a lot of things that people had on their mind will be executed.”

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When the world begins to recover from the COVID-19 pandemic, some prominent seafood executives are predicting a busy period of mergers and acquisitions.

Speaking during the National Fisheries Institute’s 2021 Global Seafood Market Conference’s economic outlook panel, seafood company advisors and CEOs said they expect a combination of factors will lead to increased M&A activity. As companies begin to see a turnaround from the COVID-19-related economic downturn, access to cheap financing could spur companies to look for new opportunities, according to Antarctica Advisors LLC Managing Partner Ignacio Kleiman.

“Money is extremely cheap. Some players see it as an opportunity to grow and consolidate,” Kleiman said. Historically low interest rates, coupled with government-promised support for the industry, will likely spur on M&A activity, he predicted.

“When money is that cheap by historical standards – and you know with so much quantitative easing, it’s going to last for a while – those with a strategic vision can take advantage of that,” Kleiman said. Those factors, he said, point to increase activity.

“There are many forces that point toward more M&A, not less,” he said.

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Central banks’ responses to the COVID-19 pandemic have contributed to a flood of cheap capital that is adding fuel to the seafood sector’s push to consolidate.

But with more institutional investors, such as private equities and pension funds, getting into the space alongside industry players, company valuations are getting more expensive. That’s at least the view of Glenn Cooke, the CEO and founder of the eponymous Canadian seafood conglomerate.

Cooke, speaking on Feb. 3 as part of a panel during the National Fisheries Institute’s online Global Seafood Market Conference, said that the deal-flow in the sector at present is “on par” with previous years. He added that interest from institutional investors heightens competition for acquisition targets.

“That makes deals a little more expensive,” he said. “You’re seeing multiples on the high side today in seafood, maybe too high, but, for us, we like resource. If we can buy more resource, whether that’s farming or fishing, either one of those resources are of interest for us.”

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One of the largest seafood sector deals in recent memory has officially closed.

The CAD 1 billion ($788 million) buyout of Canadian shellfish harvester Clearwater Seafoods by Premium Brands Holdings and a coalition of First Nations is now complete, Clearwater said in a press release.

In January, 99.89% of Clearwater shareholders voted for the deal, which will see food group Premium and the coalition of Mi’kmaq First Nations’ joint venture, FNC Holdings, acquire Clearwater at CAD 8.25 a share. The MacDonald brothers Colin and Mickey as well as John Risley previously owned over 60% of the company collectively.

“We are very excited to have a world-class seafood company like Clearwater join our ecosystem,”said George Paleologou, president and CEO of Premium Brands, in a statement.

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Maruha Nichiro, the world’s largest seafood company, has finalized the sale of Alaska seafood processor Peter Pan Seafoods, sources familiar with the deal told IntraFish on Monday.

Tokyo-based Maruha Nichiro announced in November it reached a deal to sell the company to an investment group including Alaska-based private equity group McKinley Capital Management and Rodger May, the former owner of Washington State salmon farms now owned by Cooke Aquaculture. The deal closed Dec. 31.

Maruha said at the time it expected a loss of roughly $27.9 million (€23.9 million) on the sale, after several months of unsuccessful efforts to sell the group.

Maruha began the sales process for Peter Pan Seafoods earlier this year, following a dismal 2019 Alaska salmon season. Last year’s salmon season was also a challenge for the group as competition continued to intensify in the state.

Ignacio Kleiman, managing partner at Antarctica Advisors, which is handling the sale, declined to comment on the sale to IntraFish.

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