Australian salmon farmer Tassal Group has confirmed it is in the process of acquiring major Australian seafood player De Costi Seafoods, drawing up terms of a sale agreement this week.
Tassal, based in Tasmania, confirmed it has finished “the due diligence process,” and that the company’s board of directors has “approved for the proposed acquisition to proceed to formal documentation on the basis of certain terms.”
Both companies, according to Tassal, have signed “a non-binding terms sheet” that outlines the basic terms for the acquisition. It indicates the sale will not include business trading at the Sydney Fish Markets or two retail outlets owned by George Costi at Bondi and Chatswood in New South Wales.
The exact price of the sale is not specified, however the term sheet indicates it will be approximately five times De Costi’s maintainable EBITDA. There will be an up-front cash payment, with the balance paid out in earnings from new Tassal shares over the next three years.
“This acquisition would allow us to build on Tassal’s successful domestic market focus with salmon, increase Tassal’s vertical integration in salmon and further drive scale, and the efficiencies and benefits that will flow from the increased scale that the seafood offering will bring,” said Tassal CEO Mark Ryan.
The sale is expected to be completed in July.
