Oceana to cast net wider for transformative growth

By André Janse van Vuurenoceana group logo

(Bloomberg) — Oceana Group Ltd., SA’s largest fishing company, said it plans to buy Daybrook Fisheries, the US’s second-biggest processor of Gulf menhaden fish, for $382 million. Gulf menhaden are small, oily fish which Daybrook processes to produce oil rich in omega-3 fatty acids and fishmeal.

Oceana, 43.8 percent owned by Tiger Brands Ltd., will pay as much as R4-billion rand ($202-million) from cash; raise a further $142-million of debt in the US; and get R1.2-billion from an equity-bridge facility for the purchase of Morristown, New Jersey-based Daybrook, the Cape Town-based company said in a statement Tuesday.

Oceana plans to raise the R1.2-billion rand by selling stock to shareholders to repay the bridge, and will undertake the rights offer after the acquisition is completed.

“The only way that Oceana can expand is overseas,” Anthony Clark, an analyst at Vunani Securities

Ltd. in Cape Town, said. “They’ve bought one of the best, most productive fishmeal operators in North America to support a long-term growth sector.”

Oceana, which derived three-quarters of its revenue from SA 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 percent unemployment rate.

The purchase “represents an opportunity for Oceana to undertake a truly transformative transaction,” the company said in a statement. “It will also provide Oceana with a platform to explore further initiatives globally.”

Daybrook reported normalised earnings before interest, tax, amortisation and depreciation of $48 million in 2014, Oceana said.

Tiger Brands Ltd., South Africa’s largest consumer-goods producer, and Brimstone Investment Corp., which holds 17.6 percent of Oceana, will follow their rights in the share sale, the companies said in separate statements.

Oceana rose for a second day, adding 1.6 percent to R101.50 rand by 4:01 p.m. in Johannesburg.

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