Australian salmon producer Tassal accepts take-private offer

Tassal Group, the largest producer of farmed salmon in Australia, has accepted a takeover bid from family-owned Canadian aquaculture firm Cooke Inc.

The offer of A$5.23 ($3.68; €3.62) per share implies an equity value for Tassal of approximately A$1.1 billion and an enterprise value of A$1.7 billion. It represents a 49 percent premium to Tassal’s closing price of A$3.52 per share on June 22, 2022. This was the last day before reports first emerged of a Cooke Inc bid for Tassal.

The Australian Securities Exchange-listed firm rejected Cooke’s first bid of A$4.67 per share. The deal will see Cooke acquire 100 percent of the shares and de-list the business from the ASX, should it reach completion.

Tassal’s board unanimously recommended that shareholders vote in favor of the deal at a meeting expected to be held in November 2022. The transaction should then complete before the end of the year.

Tassal employs more than 1,700 people in Australia, mostly in Tasmania, and farmed 40,000 tonnes of Atlantic salmon and 5,500 tonnes of black tiger prawns in 2021 for both domestic and export markets. Its salmon farms span five marine zones, four freshwater hatcheries and four processing facilities in Tasmania, with prawn farming and processing taking place in New South Wales and Queensland.

The Tasmanian state government has enacted a moratorium on granting any new leases in state waters for salmon farming and has also committed to ensuring net acreage of salmon farms does not increase over a 10-year period from the beginning of 2023 – making companies that already hold licenses an attractive prospect for investors.

Cooke Inc produces around 115,000 tonnes of salmon annually, which the firm said makes it the sixth-largest farmed salmon producer in the world. The addition of Tassal would take it to around 155,000 tonnes and on the cusp of the top five. Cooke Inc has Atlantic salmon farming operations in the US, Canada, Chile, and Scotland, as well as sea bass and sea bream farming operations in Spain.

‘Australia’s most valuable seafood production sector’

In a statement, Cooke Inc CEO Glen Cooke said: “Tassal is an excellent fit with Cooke, as we see many similarities between our two companies. Our people and communities are very comparable as well, with agriculture, fisheries, aquaculture and forestry prominently supporting export-driven economies.

“Our family-owned company is keen to have the opportunity to continue to grow Tassal from the strong base the employees, management and board have created. We have demonstrated acquisition history where Cooke has left operations management in place for continuity. We are highly impressed with the quality of Tassal’s infrastructure, people and culture.

“We understand completely that the Tasmanian fish farming industry is Australia’s most valuable seafood production sector, and our top priority will be to work with other producers and government regulators on continuous environmental improvement plans as well as strengthening supply chain and local community relationships. We intend to make strategic investments in engineering, science and technology to further enhance Tassal’s capabilities, in addition to growing their sales reach through leveraging our worldwide seafood distribution channels.”

The deal for Tassal means that Australia’s two largest salmon farmers will enter private ownership following the 2021 takeover of Huon Aquaculture, which was also previously listed on the ASX, by Brazilian agribusiness giant JBS in a cash deal worth A$423 million.

JBS had to fight off interest from Tattarang, the investment vehicle of billionaire Andrew Forrest, to complete that deal. Cooke Inc was also interested in acquiring Huon, according to Australian media reports.

Tassal’s new owner is a family-owned business run by Cooke, who ruled out partnering with private equity investors in a 2022 interview with IntraFish, saying: “Private equity is a death blow to a culture. Private equity has no use for [company] cultures. We want to build. We’re builders and growers, not sellers.”