Cape Town, South Africa-based seafood company Sea Harvest Group has announced its intention to acquire 100 percent of businesses engaged in the catching, processing, and sale of pelagic fish under the umbrella of the Terrasan Group – a South African investment firm.
Sea Harvest said in a statement it will also acquire nearly two-thirds of Terrasan’s subsidiaries engaged in the farming, processing, and sale of abalone in South Africa.
In one of the largest merger and acquisition deals of recent note in South Africa’s seafood sector, Sea Harvest Group says it will pay Terrasan an estimated ZAR 965 million (USD 50.4 million, EUR 46.2 million) for the entire transaction that will be settled through both cash and shares.
Terrasan, on the other hand, will acquire shares in Sea Harvest Group worth ZAR 600 million (USD 31.3 million, EUR 28.8 million) as part of the initial transaction value.
As part of the deal, Sea Harvest will acquire Terrasan’s vertically integrated pelagic fish business – West Point Fishing – which is based in St. Helena Bay on the west coast of South Africa.
Currently, West Point Fishing has more than 600 employees working on a fishing fleet that catches sardines and anchovies and produces fish oil and fishmeal for both export and domestic use. The business also sells canned fish under the 118-year-old “Saldanha” brand, which largely targets the South African market.
West Point Fishing, of which Saldanha Protein is a 60 percent majority owner, told SeafoodSource in October 2023 that it was undergoing a major maintenance program to enhance the performance of its fishmeal and fish canning operations in readiness for 2024.
The maintenance work has included replacing one of the fishmeal plant’s cooking lines, as well as revamping the plant’s reverse osmosis process for purifying industrial water used at the plant to reduce overall energy consumption. The company expected to be done with the process in early 2024.
Elsewhere in the deal, Sea Harvest says it intends to acquire a majority stake in Terrasan’s abalone business Aqunion. Aqunion, which produces and sells dried, canned, and live abalone to a customer base mainly comprising Asian buyers, is one of South Africa’s leading abalone businesses.
Overall, Sea Harvest Group CEO Felix Ratheb said the acquisition of Terrasan businesses “will create value and diversification into wild-caught pelagic species and their processed products, including fish oil, fishmeal, and canned fish.”
He is optimistic the new acquisitions will mark a turnaround for Sea Harvest Group’s own small sardine and anchovy pelagic quota through value addition, as well as adding a “118-year-old brand to the Group [in Saldanha], thereby complementing our 60-year-old hake brand.”
Once the transaction is complete, Sea Harvest “will counter the cyclicality of the pelagic fishery relative to the hake fishery and add a mature, cash-generative abalone business with a diversified customer base and markets to our existing abalone operations,” Ratheb said.
Terrasan Group CEO Danie du Toit said that the deal, from his company’s perspective, entails the necessary disposal of some of its seafood businesses to Sea Harvest Group, which will see the company reap benefits of scale and synergies “created through consolidation, leaving it well-positioned as a South African champion to exploit international opportunities and successfully compete in its target markets.”
All employees of Terrasan subsidiaries that Sea Harvest Group aims to acquire will retain their jobs, Sea Harvest stated.
“Central to our values as a company, the proposed transaction will benefit Terrasan employees by securing jobs and generating value for the beneficiaries of the Saldanha Foods Employee Trust and the local communities of Saldanha, St. Helena Bay, Gansbaai, Buffeljags, Kleinzee, and Hermanus,” Sea Harvest Group Non-Executive Chairman Fred Roberston said.
Furthermore, Terrasan’s anticipation is that the acquisition of shares in Sea Harvest “will yield several positive outcomes for [the group], its shareholders, and other stakeholders, including [the fact] that it will retain its exposure to the fishing and aquaculture industries by merging into the larger, combined, and more diversified post-transaction business of Sea Harvest,” Terrasan Chairman Stanley Subramoney said.
The transaction, according to Sea Harvest, is still subject to regulatory approvals and the approval of Sea Harvest and Terrasan shareholders, with the exact timeline for these approvals yet to be confirmed.
Photo courtesy of Sea Harvest Group
