Hobart, Tasmania, Australia-based salmon farmer, processer, and marketer Tassal Group is branching out into prawn farming with its acquisition of the Fortune Group, it announced on 14 September.
The AUD 31.9 million (USD 22.9 million, EUR 19.6 million) acquisition includes the Fortune Group’s three prawn farms located at Yamba, New South Wales; Proserpine, Queensland; and Mission Beach, Queensland, as well as the entirety of Fortune’s assets and inventory. The acquisition will be funded by a newly arranged AUD 75 million (USD 53.9 million, EUR 46.1 million) debt facility, the company said in a press release.
“We are confident of our ability to deliver on the potential we see for prawns,” Tassal Managing Director and CEO Mark Ryan said in the release. “The assets we have acquired are substantial and geographically diversified, the industry dynamics are attractive with demand for tiger prawns in Australia outstripping supply, and we have a highly experienced team on the ground.”
Tassal will invest an additional AUD 34 million (USD 23.7 million, EUR 20.3 million) in developing the farms to maximize production output, update technology, and integrate the farms into Tassal’s supply and distribution network, Ryan said.
Current production at the three Fortune prawn farms is around 700 metric tons (MT), but with the investment, Tassal plans to increase production to more than 3,000 MT over the next three to five years. Its target earnings before interest, tax, depreciation, and amortization (EBITDA) for the three Fortune farms, with existing licenses, is between AUD 15 and 25 million (USD 10.8 and 18 million, EUR 9.2 and 15.4 million) within five years, the company said.
Ryan said the acquisition will help Tassal reach a larger percentage of the seafood market in Australia. Combined, salmon and prawns comprise 70 percent of retail seafood sales in Australia “and there has been no material growth in Australian grown prawn supply for over 10 years, yet high consumer demand and pricing,” he said.
Moreover, only around 10 percent of the 60,000-MT prawn market in Australia is produced through aquaculture, whereas approximately 90 percent of the total amount of salmon consumed in Australia (also around 60,000 MT) is produced through aquaculture, Ryan said.
“We currently process and sell prawns through Tassal’s De Costi Seafoods and we are conscious of the fact our customers are demanding more prawns than we can currently supply,” Ryan said. “With our focus on optimizing domestic per-capita consumption – we will aim to increase supply of Australia aquaculture-grown prawns, with Tassal to have superior scalability from the prawn farms acquired as well as the ability to lever off its salmon sales with customers.”
In addition to building out its prawn farming capacity, Tassal is also actively evaluating regions for a possible expansion of its salmon farming operations, “including further offshore and land-based programs,” the company said.
"There is a global trend towards more sustainable, efficient sources of protein, which is driving an increase in demand for salmon and other seafood, including prawns,” Tassal said. “Opportunities in the seafood value chain need to diversify earnings and mitigate risk – they must present strong efficiencies, be acquired at an appropriate value and ensure they are earnings per share accretive to be pursued.”
Other goals for the company include widening its geographic and species diversification, the company said.
There is a global trend towards more sustainable, efficient sources of protein, which is driving an increase in demand for salmon and other seafood, including prawns,” it said. “Tassal will continue to drive seafood growth and consumption in Australia.”
