Oceana Group Ltd., a South African fishing company, said it plans to buy Daybrook Fisheries, the U.S.’s second-biggest processor of Gulf menhaden fish, for $38m.
The purchase was in line with the group’s strategy of expanding its international operations to increase diversification of its targeted fish species, operational geography, product profile and currency exposure.
Oceana will pay as much as R2.4bnm ($20m) from cash, raise a further $142m of debt in the U.S., and get R1.2bn from an equity-bridge facility for the purchase of Morristown, New Jersey-based Daybrook, the Cape Town-based company said Tuesday.
Oceana plans to raise R1.2bn by selling stock to shareholders to repay the bridge, and will undertake the rights offer after the acquisition is completed. Daybrook processes the menhaden to produce oil rich in omega-3 fatty acids and fishmeal.
Daybrook Fisheries is a vertically-integrated fishing company engaged in harvesting and processing of Gulf Menhaden into high-value fishmeal, a high protein feed ingredient, and fish oil, which is sold for aquaculture feeds and for further refining into dietary supplements. Strategically located in Empire, Louisiana, near the mouth of the Mississippi River, Daybrook is the second largest processor of Menhaden in the U.S.
Oceania said the “truly transformative transaction” would give the company access to a sustainable and well managed fishing resource at a time when demand for fishmeal and fish oil is increasing due to rising global protein requirements and growing demand from aquaculture production and as inputs into pet food and pork production.
The acquisition would increase diversification to Oceana’s product mix, improve currency exposure and give Oceana a platform to explore further global expansion.
The company said it had identified cost savings that would deliver the incorporated group with incremental earnings before interest and tax of at least U.S.$3m per annum within two years of the expected completion date in late July.
Oceana, which derived three-quarters of its revenue from South Africa and neighboring Namibia in 2014, is seeking to expand in new territories as its home market contends with the slowest growth since a recession in 2009 and a 24% unemployment rate.
Tiger Brands Ltd., which owns 43.8% of Oceana and is South Africa’s largest consumer-goods producer, will follow its rights in the share sale, the Johannesburg-based company said in a separate statement.