South African Sea Harvest expands international foot print with acquisition of Australian fishing company

SOUTH AFRICA – Sea Harvest Group, a South African seafood and fisheries company, has entered into a business purchase agreement to acquire the Western Australia based fishing business, MG Kailis Holdings, for a purchase consideration of AUD70 million (US$50m).

The acquired assets will be held by Sea Harvest Marine, a newly registered wholly-owned subsidiary of Sea Harvest Australia.

The acquisition, according to the JSE-listed company is a significant step in the execution of its investment strategy of acquisitive growth in the international seafood space, focusing on businesses of scale in high value seafood species.

Sea Harvest, established in 1964 and valued at R4.33 billion (US$277m) on the bourse, generates just over a tenth of group revenue from its Australian operations.

Plenty of goodies in the package

MG Kailis is a vertically integrated fishing business of scale which complements the Group’s existing business operations in Australia from a fishing, trading, engineering, and sales perspective.

The well-established vertically integrated prawn and fish trawling, seafood trading and engineering business, has more than 50 years’ experience.

Under the deal, the acquisition assets include vessels, intellectual property, plant and equipment, licences and fishing rights for prawns in the Exmouth region.

The package also includes trawled fish in the Pilbara region in Western Australia, providing the group with further security of supply and diversification of product.

Further to that, Sea Harvest aims to sign an employment agreement with the MG Kailis MD to assist with integrating the combined business for at least 18 months.

The transaction to be settled on a cash and debt free basis is expected to close on or about April 1 after obtaining relevant approvals from Australian regulators.

Sea Harvest foresees future growth

The agreement follows the company’s acquisition of 100% of the issued capital of Mooivallei Suiwel Proprietary Limited (“Mooivallei”) by Sea Harvest Group’s wholly owned subsidiary, Ladismith Cheese. This acquisition will add significant cheese production capacity to the Group.

The acquisitions are expected to boost the group’s performance and continue its strong growth trajectory.

In the half year period ended June 2021, the group delivered headline earnings of R202 million (US$12.9m), 19% ahead of 2020, while earnings per share increased 27% to 77.7 cents per share.  Its revenue for the period increased 5% to R2.1 billion (US$134m).

The positive results were driven by consistent performances from its South African fishing segment, the Cape Harvest Food Group segment which includes Ladismith Cheese and its Australian operations.

The Aquaculture segment, while showing an improving revenue trend and more than doubling revenue, remained severely impacted by the effects of COVID-19 on global markets.

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