JBS moves to acquire 100 percent of Australia’s Huon Aquaculture
The world’s largest meat-processing company, São Paulo, Brazil-based JBS, has acquired 100 percent of Huon Aquaculture, Australia’s second-largest salmon producer.
JBS will pay AUD 425 million (USD 313.5 million, EUR 266.1 million) in cash for Huon, or AUD 3.85 (USD 2.84, EUR 2.41) per share of the company, a 61 percent premium over its 26 February price of AUD 2.39 (USD 1.76, EUR 1.50), when the strategic review was announced. The acquisition also includes a per-share dividend of AUD 0.125 (USD 0.1, EUR 0.08).
Huon’s shares were trading at AUD 2.79 (USD 2.06, EUR 1.75) on the Australian Stock Exchange on 7 August following the announcement of the deal.
The acquisition “has already been approved by the controlling shareholders and is expected to be concluded by the end of 2021, with the approval of the other shareholders and the Australian authorities,” JBS said in a press release.
“This is a strategic acquisition, which marks the entry of JBS into the aquaculture business. We will repeat what we did previously with poultry, pork, and value-added products – to make our portfolio even more complete,” JBS Global CEO Gilberto Tomazoni said. “Aquaculture will be a new growth platform for our businesses.”
The Huon deal marks the first foray into seafood production for JBS, which conducts processing of beef, poultry, pork, and lamb around the globe, including in Tasmania, where Huon is headquartered. In March 2021, JBS-operated Seara Foods announced it had begun to distribute fish and seafood, including salmon, tilapia, and shrimp.
“Now, following the acquisition in Australia, JBS will have its own production,” the company said.
JBS Australia CEO Brent Eastwood said his firm will be able streamline Huon’s operational infrastructure with JBS’ existing operations in Australia.
“There is huge complementariness with the other business we carry on in Australia, including customer relationships, distribution, and marketing,” Eastwood said. ”Our acquisition of Huon enables us to further grow our Australian protein business and strengthen our presence with consumers and customers. We look forward to continue growing on the leading salmon business Huon has created and working with its employees, customers, and stakeholders to help the company realize this next phase of growth.”
According to a Huon Aquaculture press release, Peter and Frances Bender, who together own 53 percent of the company, said they have approved the acquisition, which remains subject to approval by the firm’s minority shareholders, who have a choice between two options proposed by JBS – both of which involve JBS acquiring 100 percent of the company, with the Bender family agreeing to a four-year non-compete clause.
“The recommended acquisition of Huon by JBS represents an excellent outcome for our shareholders, partners, and staff,” Huon Managing Director and CEO Peter Bender said. “This is a testament to the strong position Huon holds in the Australian salmon market. We look forward to seeing the continued growth of the Huon business as part of JBS. We do not anticipate any disruption to business operations.”
Huon has been undergoing a strategic review for months, with JBS rumored to be in the running to acquire the company in recent weeks. The company has struggled with COVID-19-related losses and mounting debt.
“Having fully considered a range of alternatives as part of a comprehensive strategic review process, the board believes this transaction provides Huon shareholders with an opportunity to realize significant value for their shares,” Huon Chairman Neil Kearney said. “The scheme provides certainty for Huon shareholders and a compelling premium in cash to recent trading prices for Huon shares.”
Huon operates 13 marine aquaculture sites farming salmon and trout, three processing facilities, and sales and marketing vehicles. It has a projected harvest of 35,000 metric tons (MT) in fiscal year 2021. It projects operating earnings for 2021 of between AUD 15 million and AUD 20 million (USD 11.1 million and USD 14.8 million, EUR 9.3 million and EUR 12.4 million). It has invested more than AUD 350 million (USD 258.3 million, EUR 219.2 million) in the past five years in upgrading its operational infrastructure and sustainable practices, according to JBS. Most of its products are sold domestically – it owns a 40 percent market share in Australia – with an estimated 15 percent are channeled to exports, JBS said.
“Huon has 33 years of experience in sustainable production, superior technology, and superior-quality products widely recognized by the Australian consumer, in an industry with excellent growth prospects worldwide,” Tomazoni said.
Photo courtesy of JBS