Cape Town, South Africa-based seafood company Premier Fishing SA (PFSA), an affiliate of Premier Fishing and Brands – the largest black-owned and -managed food and fishing company in South Africa – consolidated its share of the squid market by acquiring Talhado Fishing Enterprises, the largest producer of the species in the country.
PFSA will take up an additional 607 ordinary shares in the issued share capital of Talhado for ZAR 95 million (USD 5.6 million, EUR 5.2 million). Talhado, with its associated companies, owns over 15 vessels and a cold storage facility with capacity for up to 800 metric tons of squid.
The additional shares give PFSA absolute control in Talhado, as it pushes up its stake from 50.3 percent to 80.65 percent of the ordinary shares.
Prior to ceding its controlling stake to PFSA, Talhado’s shareholding comprised PFSA (50.5 percent), Scofish (30.35 percent), Patrick Mbiko Family Trust (5 percent), The Sanbourne Trust (5 percent), Dino Moodaley Family Trust (5 percent) and Dino Mark Moodaley (4.35 percent).
Premier first acquired stakes in Talhado shortly after its first listing at the Johannesburg Stock Exchange in March 2017. At the time, the company said it set out to “continue to aggressively pursue acquisitions in the fishing industry to improve our synergy and diversification growth strategy.” Then, in October 2017, Premier lived up to its word, acquiring a 50.3 percent stake in Talhado for ZAR 85 million (USD 5 million, EUR 4.6 million). The transaction was the largest transaction in Premier’s seven-month listing history at the JSE.
Talhado, based in Port Elizabeth harbor, catches, processes and markets squid, and owns both sea and land based squid-freezing facilities.
PFSA, and by extension Premier Fishing, will likely have to workin partnership with South Africa’s Department of Environment, Forestry, and Fisheries, to tackle squid resource scarcity in South Africa if the acquisition is to pay off in the long run.
South Africa has been grappling with the lingering challenge of squid resource scarcity,with seafood companies such as Premier Fishing and Brands reporting depressed revenue in the past few years as a result.
For the six months ending 28 February, 2022, Premier Fishing and Brands, reported a ZAR 62 million (USD 3.3 million, EUR 3.2 million) drop in revenues to ZAR 224 million (USD 12.2 million, EUR 11.5 million) “due to the scarcity of the squid resource.”
“Volumes landed and overall squid catch rates in the squid sector have taken a massive knock compared to the prior year,” the company said.
The same squid scarcity hit the company previously too. Premium Brands posted a ZAR 100 million (USD 5.9 million, EUR 5.4 million) dip in revenues to ZAR 475 million (USD 28 million, EUR 25.8 million), driven by South Africa’s tough economic times, and reduced catch rates in the squid sector for the full year ending 31 August, 2022.
“However, whilst the export market for squid remains very strong as the market saw high prices per kilogram, the group unfortunately could not capitalise on the price factor, due to the low volumes caught,” Premier’s full year report said.
According to Premier Fishing & Brands CEO Sooren Ramdenee, the recent suboptimal performance of the company’s squid division could be attributed to unexpected environmental challenges the sector faced.
The company said it intends to leverage on synergies between its operations and those of Talhado and, “thereby, introduce efficiencies in the business and save costs.”
Despite the challenge of constrained availability of squid in South Africa, seafood companies such as Premier Fishing have realized there is currently high demand internationally, including for the country’s main species Loligo reynaudi, locally known as chokka, resulting in elevated export prices.
Currently, squid fishing has globally experienced a “meteoric rise and resulting demand for the species has no historical precedent, with some areas seeing a more than 800 percent increase in the number of vessels in just the last five years” according to Greenpeace.
The increase in consumption of squid globally has been linked to growing awareness among consumers of the seafood’s nutritional benefits, including its healthy fats and high vitamin and mineral content.
With full control of Talhado, Premier said it hopes to capitalize on the company’s extensive international sales network, especially in the Southern European markets of Spain, Portugal, and Italy, to increase its revenue base.
Photo courtesy of Talhado Fishing Enterprises
