October 26, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Already a dominating presence in the global beef, poultry, pork, and lamb categories, and despite having a hand in trading seafood in select markets through its Seara subsidiary, JBS announced in August of this year a deal that marks the first foray into direct seafood production for this São Paulo-based company. 

In early August GAI News shared that JBS was expanding into the fish protein sector, having agreed to acquire Huon Aquaculture – the second largest salmon producer in Australia – for A$425 million (US$313.5 million). At the time, however, the deal could not move forward without securing approval from Australia’s Foreign Investment Review Board (FIRB) – that approval has just been granted. 

“This is a strategic acquisition, which marks the entry of JBS into the aquaculture business,” said Gilberto Tomazoni, Global CEO, JBS, in August. “We will repeat what we did previously with poultry, pork, and value-added products – to make our portfolio even more complete. Aquaculture will be a new growth platform for our businesses.”

Located in Tasmania and founded in 1986, Huon controls vertically integrated salmon and trout operations, including hatcheries, pen-based farming, harvesting, processing, marketing, sales, and distribution holdings and activities, with expectations for a harvest of 35,000 metric tons for fiscal year 2021.

With a 40 percent market share in Australia, most of its output is sold domestically, with another 15 percent directed toward exports, reflected in company earnings for 2021 forecasted to be between A$15 million and A$20 million (US$11.1 million – US$14.8 million).

“The FIRB decision is another important step in securing the future of Huon, our 800-plus employees, and the hundreds of Tasmanian businesses that work with our company,” said Neil Kearney, chairman, Huon Aquaculture, in a press release. “In addition to its commitment to invest in the business and our people, JBS has committed to maintaining our world-leading farming practices to support long-term sustainable growth. Huon has established the highest standards of animal husbandry, biosecurity, environmental management, and sustainable farming practices and JBS will continue this uncompromising approach. Importantly, JBS also has the proven skills and expertise to access new international markets for Huon’s premium products.”

The approval handed down by FIRB allowed Huon to conduct a vote addressing the takeover at a shareholder meeting scheduled for October 29 at which two alternative deal structures with differing tax implications were to be presented for consideration.

It was already expressed in August of this year that Huon’s directors, along with the company’s major shareholders Peter and Frances Bender, who hold 53 percent of Huon’s shares, intend to vote their approval for the deal at the anticipated shareholder meeting. 

At the time, Peter Bender, Huon managing director and chief executive, said, “The recommended acquisition of Huon by JBS represents an excellent outcome for our shareholders, partners and staff. This is a testament to the strong position Huon holds in the Australian salmon market. We look forward to seeing the continued growth of the Huon business as part of JBS. We do not anticipate any disruption to business operations.”

However, if the shareholder vote does not support the acquisition (a 75 percent vote of approval is needed to move forward), Huon would be put in the position of having to pay A$4.25 million (US$3.2 million) in penalties to JBS.

But the hurdles don’t stop there. If approved by Huon’s shareholders, the deal must then be reviewed by an Australian court, which will also have the power of rejection. This possibility is negligible however, as gaining FIRB approval was admittedly the largest challenge for JBS.

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.