The sale process for Clearwater Seafoods will continue, despite concerns over the economic fallout from the COVID-19 pandemic – and in particular, the market downturn that has driven down the price of shares of the company’s stock.
The Halifax, Nova Scotia, Canada-based company announced it was for sale in a 5 March press release.
Clearwater’s stock, which is traded on the Toronto Stock Exchange under the symbol CSEAF, was trading for USD 3.21 (EUR 2.96) per share, down from its 52-week high of USD 4.56 (EUR 4.21), which it hit in September 2019. It was trading as high as USD 4.45 (EUR 4.11) as recently as 21 January, but Clearwater Co-Owner John Risley said he didn’t view the coronavirus outbreak as a major impediment to the process of selling the company, according to The Chronicle Herald.
“I don’t have to tell you there are many aggressive forms of flu virus that kill tens of thousands of Americans every year and there isn’t a general panic. So, I’m not quite sure why there is this time,” Risley told the Chronicle Herald on 5 March. “Anyway, my point being is that COVID-19 is a temporary phenomenon … [Clearwater’s strategic review] process is likely to be a several-month process and extend well beyond whatever temporary affect COVID-19 is having on markets.”
Clearwater Seafoods Inc. is reviewing a range of proposals that includes the potential sale of all or part of the company, or a merger or other kind of transaction involving a third party, including a joint venture or license-sharing agreement, the company announced. The newspaper reported the company has formed a special committee of company board members that includes Brendan Paddick, the founder of Columbus Communications Group; Jane Craighead, a former executive at Scotiabank; Vicki McKibbon, the president of transportation at Armour Transportation Systems; Karl Smith, a former executive with the Fortis Group; and Jim Dickson, a partner with the Stewart McKelvey law firm. The committee will solicit, consider, and evaluate proposals, in consultation with Antarctica Advisors, a Miami, Florida-based independent strategic and financial advisory firm.
Besides Risley, Clearwater’s other owners include brothers Colin and Mickey MacDonald. Speaking for both himself and the MacDonalds, Risley said the timing was right for them to pass off ownership of the company.
“I think a mistake a lot of owners make is they pass this responsibility on to their heirs and that’s a tough thing to do because people don’t know really what you want. So you’re better off to do this when you’re all healthy and so I think that’s one motivation,” Risley said. “A second motivation is the fact that we did have, out of the blue, a couple of people who expressed an interest in acquiring the business and then which caused us to reflect. And [third motivation], the company is doing well under a very competent team and, as I say, they’ve got ambitions to grow the business and it would be wrong for us to hold them back from those growth ambitions.”
Risley said he and the MacDonalds had no desire or intention to take Clearwater private, despite their belief the company is undervalued on the stock market.
“I think if any children amongst us who had an interest in doing that [taking it private], our view might be different. I think our view is that the company is a small company on the global scene but a large company on the Canadian scene, and professionally managed and needs to grow,” he said.
The ownership group strongly would strongly prefer a bid from a food business or an entity with “ambition to continue investing in the industry,” Risley said.
Risley said the controlling shareholders never had an interest in potentially selling the company prior to right now.
He also acknowledged the company received a hostile takeover bid from Cooke Aquaculture in 2011, in which Cooke’s bid of CAD 97 million (USD 66.4 million, EUR 61.3 million) was ultimately rejected.
“We had Glenn Cooke (CEO of New Brunswick-based Cooke Aquaculture) take a position in the company and expressed a desire to buy the company, but we weren’t interested at that time,” he said.
