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Tassal nets De Costi Seafoods hook, line and sinker

As of today (1 July), Tassal has consolidated its supply chain by its acquisition of De Costi Seafoods.

Tassal will pay $50 million upfront and in cash on completion of the acquisition and a share option, capped at 10 million shares, which will be paid over the next three years.

The acquisition will allow Tassal to control its supply chain from the fish farms, right through to retail.

De Costi Seafoods is one of the largest in Australia’s seafood industry, and Tassal’s chairman, Allan McCallum said its central location enables it to service retailers down the East Coast of Australia and South Australia.

“The De Costi Seafoods business is extremely complementary to Tassal and consistent with our Salmon and Seafood strategy,” McCallum said.

“Following completion of this acquisition, Tassal will be very well placed to access and grow Australia’s $4.3 billion annual seafood market, and support significant market growth in seafood for retailers down the East Coast of Australia and South Australia.”

Last year, Tassal completed its $200 million five year investment program to improve hatching, growing and processing infrastructure. With the benefits of the investment flowing through, Tassal has been able to remove its reliance on the export market.

Tassal’s Managing Director and CEO, Mark Ryan said “the proposed acquisition of De Costi Seafoods will further build on our domestic salmon capabilities, increase Tassal’s vertical integration in salmon, drive increased scale and provide Tassal with access to the broader seafood market. This increased scale will drive further efficiencies and benefits to both Tassal’s salmon offering as well as seafood, and uniquely position Tassal for its next phase of growth.”

While completion is yet to occur, the agreement has been structured in a way to allow Tassal to acquire the business and obtain the benefits of its earnings from today, 1 July 2015, and for George De Costi to obtain the benefits of the earn-out (share) component from 1 July 2015.

The business will be run from Tassal today, whilst progressing towards satisfaction of certain conditions, including: no material adverse changes occurring in respect to the business, George De Costi entering into an employment agreement for at least three years from the completion of the acquisition and the completion of the agreed restructure of De Costi Seafoods.

 

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