Tassal rejects Cooke’s USD 720 million purchase offer
In the wake of a 27 June announcement that Cooke Aquaculture Inc. and Cooke Aquaculture President and CEO Glenn Cooke had taken a 5.4 percent stake in Tassal, the companies also announced Cooke had attempted to purchase Tassal outright.
Australian aquaculture firm Tassal produces roughly 33,000 MT of salmon each year, grown in five different regions in sea-based pens, and branched into shrimp aquaculture with its purchase of Fortune Group in 2018.
In a press release, Cooke Aquaculture indicated it placed a non-binding indicative proposal to purchase the Tasmania, Australia-based company for a cash consideration of AUD 4.85 (USD 3.36, EUR 3.19) per share. At the time of the offer on 27 June, Tassal's share price was at AUD 3.97 (USD 2.75 EUR 2.61).
Cooke’s offer valued Tassal at over AUD 1.04 billion (USD 721 million, EUR 684 million), and the offer had received approval from Australia's Foreign Investment Review Board.
Soon after the offer, Tassal’s board of directors issued a release revealing Cooke Aquaculture had made previous non-binding proposals to purchase the company, at AUD 4.67 (USD 3.24 EUR 3.07) and AUD 4.80 (USD 3.33 EUR 3.16) per Tassal share – both of which the company’s board rejected. Tassal's board announced it rejected Cooke’s third offer as well.
“The company’s board of directors has evaluated the indicative proposal with the assistance of its financial advisor and has determined that the indicative proposal does not reflect the fundamental value of the business and is not in the best interests of shareholders,” Tassal’s release said. “Accordingly, the company’s board has determined not to engage with Cooke regarding the indicative proposal. Shareholders are advised that they do not need to take any action.”
Tassal’s board said it believes Tassal has “an attractive independent future,” and that the company is “well-positioned to deliver growth in shareholder value.”
In the wake of the moves, Tassal’s share price spiked to its highest value since 2020, reaching AUD 4.61 (USD 3.19 EUR 3.03) per share. The last time the price was that high was 12 February, 2020 – and the price was only at AUD 4.61 for one day.
Cooke said that it intends to expand into Australia and replicate the success there it has had elsewhere. In 2021, it achieved total sales of CAD 2.4 billion (USD 1.8 billion, EUR 1.7 billion), and that it has successful salmon operations in Atlantic Canada, the U.S., Chile, and Scotland; sea bass and sea bream farming operations in Spain; a seafood and wild fishery division in North America and South America; and has “one of the largest premium shrimp farms in Latin America" via its 2019 purchase of Seajoy.
“Cooke now has a global workforce of 10,000 employees in 10 countries – mainly located in rural areas,” the company said.
Cooke also said that it considered its most-recent offer to be fair.
“Cooke believes its proposed cash consideration of AUD 4.85 per Tassal share is an attractive premium considering Tassal’s salmon volumes have been maximized given restrictions on new marine farming leases,” the company said. “Cooke considers its revised proposal is particularly attractive given the significant increase in risk-free rates and the cost of debt since the first non-binding indicative proposal given to the Tassal board.”
While Tasmania has issued restrictions on new marine farming leases, it’s unclear how long they will last. Tasmania’s government has developed a 10-year salmon plan that will begin on 1 January, 2023. A key part of that plan was an immediate 12-month ban on new exploration permits. However, leaked maps acquired by a group called Neighbours of Fish Farming indicate that Tasmania has potentially drawn up maps for potential permitting of new areas for salmon farming in the province.
After the rejection, Cooke Aquaculture told SeafoodSource it would not comment further on the offer at this time.
This isn’t the first time that Cooke has been rebuffed in its attempts to purchase a company that operates in Tasmania, Australia. In 2021 Cooke revealed it was interested in purchasing Huon Aquaculture, which is also based in Tasmania Australia. That attempt ultimately failed when JBS Australia, a subsidiary of Brazilian meatpacking giant JBS, managed to win its own takeover bid.
Photo courtesy of Tassal Group Limited