Oceana buys stake in US Daybrook Fisheries
Acquisition in line with diversification
OCEANA Group, the country’s largest fishing company, will add American flavour to its plate following an announcement yesterday of its proposed R4.58 billion acquisition of Louisiana, US-based Daybrook Fisheries.
Daybrook is a private company that produces Omega-3 rich Menhaden fish oil and fishmeal, and is responsible for between 35 percent and 40 percent of Gulf Menhaden catch in the area. Gulf Menhaden are small oily fish and are migratory plankton surface-feeders that swim in large schools during the fishing season between April and November.
Daybrook reported R1.3bn in revenue last year following the sale of 76 862 tons of fishmeal and fish oil.
Tiger Brands, which holds a 43.8 percent stake in Oceana, said it was committed to the acquisition and would follow its rights in the share sale.
Analysts have commended the acquisition.
“Oceana’s made a bold move into (the) American fishing industry… interesting asset, though still just a commodity,” Keith McLachlan at Alpha Wealth said yesterday.
The acquisition is in line with the Cape Town-based company’s diversification strategy, in which it plans to expand into new territories amid subdued growth in the local market since the 2009 economic downturn.
Diversification
“The proposed acquisition will increase diversification to Oceana’s product mix and improve currency exposure, while creating a significantly larger group with multi-country exposure,” the company said.
It comes after an evaluation of opportunities in South Africa and across the world to boost its diversity.
Oceana will cash in on the rising demand for fishmeal and fish oil because of higher global protein needs from aquaculture production and growing demand as ingredients into pet food and pork production.
It said including Daybrook in its portfolio was expected to boost earnings before interest and tax of about R32 million a year within two years of the acquisition.
Oceana expects to pay a combination of: up to R2.4bn in cash and raise up to R1.7bn from debt in the US. It will also get R1.2bn from an equity bridge facility.
Oceana stock rose 2.91 percent to close at R102.85 on news of the acquisition yesterday.