High Liner buys American Pride Seafoods

By

SeafoodSource staff

Published on
September 30, 2013

High Liner Foods on Tuesday announced it acquired the principal assets and operations of American Pride Seafoods from Seattle-based American Seafoods Group.

High Liner paid USD 34.5 million (EUR 25.5 million) in cash proceeds, subject to closing working capital adjustments, to acquire American Pride’s tangible assets, which principally include inventory, plant and equipment located in New Bedford, and excludes accounts receivables of approximately USD 15.5 million (EUR 11.4 million), for a total value of about USD 50 million (EUR 37.9 million).

As part of the transaction, High Liner assumed certain operating leases related to the acquired businesses. High Liner does not expect any material intangible assets will be recorded in its financial statements as a result of the acquisition.

“Our vision is to be the leading frozen seafood supplier in North America and a key component of High Liner Foods’ strategy is profitable growth through acquisitions like American Pride, that complement our business and should strengthen our leadership position within the seafood industry,” said Henry Demone, High Liner CEO. “American Pride is well-established in many key market segments and known for offering its customers quality and value. This transaction should create incremental value for our shareholders and bring us one step closer to achieving our vision.”

“Our long history with American Pride and its excellent employees made the decision to sell the business a difficult one,” said Bernt Bodal, American Seafoods Group CEO. “However, this sale will allow us to strengthen our position as a producer of premium seafood products from the sustainably-managed fisheries in Alaska and the Pacific Northwest and lead the industry in developing new products and markets from those fisheries. We want to thank the dedicated and talented people at American Pride for all of their contributions to the success of American Seafoods Group. We wish High Liner Foods and our former employees all the best in the future.”

High Liner plans to delay the integration of this acquisition into its business and will operate American Pride without any substantial changes to its existing operations through 2014. This will allow High Liner to continue its current efforts focused on fully realizing the synergies related to integrating Icelandic USA, which it acquired in the fourth quarter of 2011. As a result, realization of most of the synergies expected from integrating this acquisition into High Liner Foods' business are anticipated to occur in 2015. While the operating margins of American Pride have traditionally been lower than those of High Liner, the company expects these margins will improve to levels closer to High Liner’s existing operating margins once it is fully integrated and expected synergies from the transaction are realized.

American Pride’s branded and private label products are primarily distributed in the U.S. to foodservice customers in the commercial and independent restaurant, health care and education markets, as well as to some export and U.S. retail markets.

American Pride’s revenues were approximately USD 190 million (EUR 140.2 million) in 2012. High Liner expects the acquisition to be modestly accretive to earnings in 2014, after considering the impact of incremental interest costs related to financing the acquisition, and excluding the impact of any integration costs. One-time costs associated with the acquisition will be expensed in the current period and the acquisition will be financed with existing credit facilities.

RBC Capital Markets acted as financial advisor to High Liner Foods. Moelis & Company LLC acted as financial advisor to American Seafoods Group.

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