Multi-million Rand acquisition boosts growth for fishing company

Sea Harvest seeks to acquire Terrasan

SOUTH AFRICA: The R965 million intended acquisition of Terrasan Group Limited’s subsidiaries in the catching, processing, and sale of pelagic fish, and 63.07% of their subsidiaries in the farming, processing and sale of abalone by Sea Harvest Group Limited will substantially boost the fishing company’s growth ambitions.

The initial purchase price will be settled through R600 million in Sea Harvest shares and the balance in cash, together with two further performance linked earnout amounts.

As a part of the transaction, Sea Harvest will acquire Terrasan’s St Helena Bay-based vertically integrated pelagic fish business. Employing more than 600 people, the business operates a fishing fleet that catches sardines and anchovies and produces fish oil and fish meal and canned fish market.

In addition to the fishing business, Sea Harvest will also acquire a majority stake in Terrasan’s 30-year-old, vertically integrated abalone business, Aqunion, based in Hermanus and Gansbaai. Employing 430 people, Aqunion produces and sells dried, canned and live abalone to a diversified customer base across the Far East.

“We are confident that the acquisition will create value and diversification into wild caught pelagic species and their processed products, including fish oil, fish meal and canned fish,” said Sea Harvest Group CEO, Felix Ratheb.

“Furthermore, it will enable us to add value and scale to our own small sardine and anchovy pelagic quota where we currently have a small footprint; add a 118-year-old brand to the Group thereby complementing our 60-year-old hake brand; counter the cyclicality of the pelagic fishery relative to the hake fishery and add a mature, cash generative abalone business with a diversified customer base and markets to our existing abalone operations.”

Terrasan Group CEO Danie du Toit commented that Terrasan and Sea Harvest believe that a combined South African abalone business will benefit from scale and synergies created through the consolidation, leaving it well positioned as a South African champion to exploit international opportunities and successfully compete in its target markets.

Alluding to the portion of the purchase consideration that will be discharged by way of the issue of Sea Harvest shares to Terrasan, Terrasan Chairman Stanley Subramoney says “This will yield several positive outcomes for Terrasan, its shareholders and other stakeholders, including that it will retain its exposure to the fishing and aquaculture industries by merging into the larger, combined and more diversified post-transaction business of Sea Harvest.”

The transaction is subject to regulatory approvals, the approval of Sea Harvest and Terrasan shareholders, and conditions normal for a transaction of this nature.