Canadian aquaculture giant Cooke has swallowed a 5.4 per cent slice of ASX-listed salmon producer Tassal, and is ready to gobble up more chunks of the Tasmanian-based company.
Cooke was revealed as the mystery buyer of a parcel of Tassal shares on Monday after a 10-day spending spree, buying at prices ranging from $3.42 to $3.85 a share and ending speculation that investment banker David Williams was returning for another bite at the company.
Mr Williams bought Tassal from receivership in 2003 before floating the company.
He has brokered some of the biggest Australian agribusiness deals, including turning around the fortunes of almond producer Select Harvests and returning Vegemite to Australian ownership after convincing Bega Cheese to buy the spread from confectionary titan Mondelez.
While Mr Williams was buying Tassal shares last week under Amore Foods – a private company he launched in 2004 – a substantial shareholder notice lodged on the ASX reveals he was purchasing on behalf of Cooke.
Cooke cast a line on Tassal in 2010 before walking home with an empty catch. It later tossed a lure at rival Huon, with Mr Williams advising them on the bid.
But it was unsuccessful, with Brazilian meat processor JBS acquiring Huon for $425m despite resistance from Andrew Forrest.
Cooke has turnover of some $2.7bn, salmon farms in Canada, US, Chile and Scotland, and has 10,000 employees. It is understood to be wanting to increase its geographic diversification further to help reduce the risks such as adverse weather and disease.
Tassal shares surged 3.1 per cent to $3.97 – a two-year high.
It is understood that Cooke is still active in the market, given Monday’s share jump.
JBS Australia managing director Brent Eastwood said at The Australian’s Global Food Forum this month that salmon farming was a “misunderstood business” and was an efficient way to help meet surging demand for protein.
“At the end of the day the planet we live on, the surface is 70 per cent water. But the protein we consume today is only 7 per cent fish,” Mr Eastwood said. “In many parts of the world there is overfishing of the available natural wild species of fish. But (salmon farming) is a very sustainable business. It’s very energy efficient and doesn’t use much land.”
Tassal chief executive Mark Ryan said at the company’s latest financial results in February that it was now “experiencing the benefits of scale” after completing its investment in salmon biomass growth.
“Together with the investments in and growth of our prawn business, where we achieve more attractive capital and working capital cycles, Tassal is focused on growing cashflow and optimising returns. We have delivered a stepchange in cash generation and believe Tassal is well positioned to deliver further improvements in cash flow and cash conversion going forward,” Mr Ryan said.
“We are now at scale delivering a sustainable annual salmon harvest of around 40,000 hog tonnes, and optimising sales mix through branded product development in retail leveraging Tassal’s No.1 salmon and protein brand position, strategically balancing contract unbranded sales, and capitalising on the strong recovery in global pricing and the commencement of pricing recovery in the domestic market.”
Cooke is being advised by investment banker David Williams, who bought Tassal from receivership in 2003 before floating it on the ASX.
Mr Williams has brokered some of the biggest Australian agribusiness deals, including turning around the fortunes of almond producer Select Harvests and returning Vegemite to Australian ownership after convincing Bega Cheese to buy the spread from confectionary titan Mondelez.
He has been buying Tassal shares in the past two weeks under Amore Foods – a private company he launched in 2004 – on behalf of Cooke at prices ranging from $3.42 to $3.85 a share.
Its shares surged 3.1 per cent to $3.97 – a two-year high – after Cooke’s stake in the company was revealed on Monday. Tassal is being advised by Goldman Sachs as its financial advisor and Herbert Smith Freehills as its legal advisor.