Denmark’s BioMar Group has acquired a 70 percent stake in South American shrimp feed company Alimentsa for DDK800 million (US$$121 million). The current owners will remain with the company as minority shareholders.
Although BioMar is the third largest producer of feed in the world for the fish farming sector, this deal will expand BioMar’s reach into the shrimp feed market. This is a relatively new area of business for the group, which is a wholly-owned entity of the Dutch conglomerate Schouw & Co.
Founded in 1986 in Guayaquil, Ecuador, Alimentsa is the fourth largest shrimp feed producer in the country with output of 110,000 tons of shrimp feed, generating revenue of approximately DKK 500 million (about US$83 million). Based on the parameters of this deal, the company is valued at US$170 million on a debt-free basis.
Having established a presence in the space in 2016 through its shrimp feed factory in Costa Rica, the addition of Alimentsa will gain a strategic foothold in the key market of Ecuador, which is one of the top shrimp producers in the world with output of 450,000 tons per year.
“We foresee a solid business potential in Ecuador, but first and foremost we believe that the combination of a strong local company with recognized products and deep insights into the market together with a global company with the size and innovation muscle as we have in BioMar Group will enable us to meet the future requirements of the market as well as the end-consumers. We are very confident in the local management and the organization,” said Carlos Diaz, CEO BioMar Group.
High demand from Asia supported Ecuador’s shrimp exports to reach record levels last year. Exports for the month of May 2016 reached 76.7 million pounds and boosted Ecuador’s shrimp exports for the year to 322.2 million pounds, according to Seafood.com. Within this market, Alimentsa controls market share of between 12 and 15 percent.
This demand combined with Ecuador’s reputation for high quality feed, sustainability, optimal conditions that support three production cycles per year, and much lower farm densities than other production regions, have drawn other large-scale players to the country.
In July 2015 Cargill announced it had formed a joint venture with Naturisa, Ecuador’s second largest shrimp producer and fourth largest exporter, to build a $30 million shrimp feed facility near Guayaquil, Ecuador. The new mill will have the capacity to produce 130,000 tons of feed per year and is scheduled to be fully operational this year, reflecting how Ecuador is becoming a targeted region for the global shrimp feed industry.
“This joint venture with Naturisa positions us to become one of the largest producers of shrimp feed in Latin America,” said Sarena Lin, president of Cargill’s animal feed and nutrition business at the time. “It creates new opportunities for both organizations’ customers and stakeholders.”
Echoing this strategic vision, BioMar CEO Carlos Diaz said, “It is our ambition to become a major player within high-end shrimp feed. With the acquisition of Alimentsa we can immediately deliver an attractive value proposition to the shrimp farmers in Latin America and we believe that we in the future – together with Alimentsa and the customers – can develop new product solutions based upon shared interest in innovation, cooperation, sustainability and performance. During our due-diligence process we have been confirmed that the acquisition will enable us to build a strong relationship towards the Latin American shrimp farmers. Alimentsa is recognized for high-end feed and a professional technical service. That is very much in line with our focus in BioMar.”
-Lynda Kiernan
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com