OCEANA Foodcorp deal on the hook

Since mid-October last year the share price of fishing conglomerate Oceana has netted a gain of over 50%.

This sudden turn in the tide of market sentiment followed a rather prolonged period in which Oceana’s share price looked stuck in the doldrums when the market believed that a conditional ruling by the competition authorities could scupper a key deal.

Indeed in mid-2014 it seemed the chances of Oceana landing the proposed R400m buyout of certain of consumer brands conglomerate Foodcorp’s fishing interests were less than slim.

Essentially, Oceana was hoping to pull onboard a sizeable pelagic fishing operation, a decent haul of deep sea trawl hake and a basket of south coast lobster. The competition commission — clearly wary of Oceana’s market leading position in the canned pilchard market via Lucky Star — wanted the pelagic quota to be excluded from the Foodcorp deal. The commission was seemingly happy for Oceana to acquire the pelagic assets and the 1 000 employees — but effectively removing the very means of employment (via the quotas) made the acquisition of the Foodcorp assets unviable.

So throwing back the pelagic catch was a deal breaker for Oceana, and why the company spent the best part of two years getting a decision by the competition appeal court to effectively rule in favour of including the pelagic fishing rights in the proposed Foodcorp acquisition.

Oceana CE Francois Kuttel reiterated that the absence of securing the pelagic fishing rights would have meant not going ahead with the deal.

He stresses: “The pelagic fishing rights were a commercial Francois Kuttel Important to put the Foodcorp deal in context imperative for the acquisition to proceed.”

Kuttel also believes it’s important to put the Foodcorp deal in context — pointing out that while Oceana holds around 75% of the canned pilchards market it currently holds only 15% of the total allowable catch (TAC) for pilchards. In recent years more than half the pilchards canned by Lucky Star were sourced outside SA.

Kuttel notes that over half of Oceana’s canned pilchards are imported from a dozen canneries the company has established internationally. “We now want to look at replacing some of these imports by using Foodcorp’s pelagic fishing rights. We argued from the start that we were best placed to secure Foodcorp’s long-term future and this has been a long and arduous process.”

The Foodcorp deal will push Oceana’s TAC in pilchards to 25% and increase the ratio of locally sourced fish, a development that, considering the