Jiajia Food Group has acquired Dalian Ocean Fishing Company for CNY 4.7 billion (USD 705 million, EUR 604 million), according to Yicai Global, the English-language news arm of Shanghai, China-based financial news group Yicai Media.
Jiajia Food Group will take on a 100 percent stake in Dalian Ocean Fishing Company through a purchase made with cash and stock by 14 shareholders. The ownership group will include current Dalian Ocean Fishing Chairman Li Zhenyu, who will hold a 16.7 percent stake upon the closure of the transaction. Jiajia Chairman Yang Zhen and his family will actually reduce their shareholding from 42.3 percent to 25.1 percent of the company.
Founded in 2000, Dalian Ocean Fishing operates 31 longline fishing vessels, making it the largest tuna fishing company in China. In 2017, the company recorded CNY 640 million (USD 96 million, EUR 82.2 million) in revenue and CNY 330 million (USD 50 million, EUR 42.4 million) in net profit. Yicai Global reports that its largest customer is Japan’s Toyo Refrigeration, making it the largest Chinese supplier of high-end tuna in the Japanese market.
Best known as a maker of soy sauce, Hunan, China-based Jiajia is aiming to diversify and expand into other areas of the food sector, according to the company. Peng Jie, the company’s secretary, told Yicai Global the company wants to appeal to the high-end market and break away from the restricted development associated with a unified product line-up.
Even though Dalian Ocean Fishing’s CNY 4.7 billion valuation dwarfs that of Jiajia’s asset valuation of CNY 2.8 billion (USD 420 million, EUR 360 million), the fishing company struggled with a shortage of funding, having twice made unsuccessful forays into the capital market, according to Yicai Global. The company may have struggled with the rising cost of fishing and with falling amounts of offshore fishery resources, Chanson Capital Executive Director Shen Ming told Yicai Global
“Enterprises involved in the industry are in great need of funds,” Ming said.
Despite the short-term headwinds for Dalian Ocean Fishing’s, the overall market for tuna is growing rapidly – especially in China, according to Ming. The China Fisheries Association is predicting that overall demand will reach CNY 7 billion (USD 1.05 billion, EUR 900 million) in 2018 – an annual compound growth rate of more than 30 percent.
Speaking with Yicai Global, Jiajia’s Peng said his firm will aim to create synergies with Dalian Ocean Fishing in the development of derivative foods, such as fish meal, fish oil, and canned tuna. The fact that tuna is used as an ingredient in the fermentation of some high-end soy sauce in Japan will be a good starting point for such endeavors, Peng said.
