China Fishery said yesterday that it will pay $555.8 million offer for Copeinca, Peru’s second-biggest fishing company. The acquisition would make China Fishery Peru’s biggest producer, and also among the world’s leading producers of fishmeal and fish oil.
The purchase would diversify China Fishery’s revenue base, be consistent with the firm’s strategy of accessing fishing resources in key markets and increasing its catch quota. Peru is the biggest producer and exporter of fishmeal and fish oil by volume in the world, according to the International Fishmeal and Fish Oil Organisation statistical yearbook, 2011.
China Fishery, the Singapore-listed subsidiary of frozen seafood supplier Pacific Andes International, will pay NOK53.85 ($9.45) in cash for each of Copeinca’s Oslo-listed shares. That represents a premium of 29.4% to its three-month volume-weighted average price. “The acquisition [of Copeinca]…contributes significantly to China Fishery’s strategic objectives of increasing and securing access to fishery resources globally,” said Ng Joo Siang, vice-chairman and managing director of Pacific Andes in a statement.
“[It] would significantly expand our presence in Peru, as it secures an attractive and well-managed fishmeal and fish oil focused business at a fair and reasonable valuation,” he added.
Pacific Andes was set up in 1986 and listed on the main board of the Hong Kong Stock Exchange in 1994. Its operations range across seafood value chain, which includes harvesting, sourcing, ocean logistics and transportation, food safety testing, processing, marketing and distribution of frozen fish products, as well as fishmeal and fish oil. It has a global reach, but with a particular emphasis on China.
Pacific Andes’ resources development and supply chain management division, Pacific Andes Resources Development and its fishery and fish supply division, China Fishery, have been listed in Singapore since 1996 and 2006, respectively.
So far, shareholders owning 14.2% of Copeinca have irrevocably undertaken to accept the offer. China Fishery has also obtained an option over the shares of one of Copeinca’s top shareholders in respect of his 10.8% stake, and, based on pre-soundings, the company believes support exists from another group of shareholders representing 16.5% of Copeinca, according to a statement yesterday.
China Fishery intends to maintain the Norwegian listing of Copeinca and expects the offer to start by mid-March.
The acquisition will be funded by a combination of a 1-for-1 fully underwritten rights issue that will raise net proceeds of up to S$344.2 million ($278 million), a loan facility of $295 million and China Fishery’s internal resources.
The rights issue is priced at a 50.7% discount to China Fishery’s last transacted price of S$0.69 on February 25, 2013 and a 34% discount to the theoretical ex-rights price. Shareholders will be offered one new ordinary share for each existing ordinary share at S$0.34.
If the acquisition attempt fails, proceeds from the rights Issue will be used to repay some existing club loan facilities ($129.1 million), fund other expansion opportunities, finance working capital and China Fishery’s general corporate purposes.
However, Pacific Andes Resources Development, which directly and indirectly owns 70.51% of China Fishery, has undertaken through its subsidiaries to subscribe for not less than 81.82% of the rights issue. The remainder is fully underwritten.
The purchase is conditional on receiving approvals from 50.01% of Copeinca shareholders, and agreement from regulators, the lenders, the rights issue underwriters and company shareholders. The offer price is not subject to any adjustment as a result of Copeinca’s dividend distribution of NOK3.50 per share, to be resolved in March 2013.
Rabobank and Rothschild are acting as financial advisers to China Fishery for the acquisition. DBS and Standard Chartered are acting as the joint lead managers and underwriters for the rights issue.