Joyvio Group, a wholly-owned subsidiary of Legend Holdings, has agreed to acquire 94.47 percent of major Chilean salmon farming company Australis Seafoods for $880 million.
Headquartered in Santiago and traded on the Santiago Stock Exchange, Australis’ business accounts for 9 percent of Chile’s total salmon output, producing 64,000 tons of salmon per year from its farms concentrated in southern Chile Patagonia.
Known as one of the best run salmon farming operations in the country, Australis also owns high-quality licenses and recorded revenue of US$399 million and profit of US$73.4 million for 2017. Over the same time period, Legend Holdings saw sales of US$47 billion, making it one of the top 700 companies in the world.
In a statement, Legend Holdings describes Australis as having “sound corporate governance, an outstanding management team, leading performance indicators in the industry, a great reputation, and strong profitability. It owns a number of licenses in the XII region in Chile which has the greatest development potential and extensive natural resources, and is the company in the XII region with the highest production, which still has much room for its growth in the future.”
Under Legend’s control, Joyvio has focused on animal protein and fresh fruit, but has turned its eye toward seafood, and views salmon as having huge potential in both the Chinese domestic market and internationally.
“Salmon is the most recognized seafood category for consumers worldwide with high nutritional value, high adaptability in taste and easy to cook. Salmon can be supplied throughout a year, which represents an unparalleled advantage in terms of industry standard, technology leadership and sustainability,” noted the company. “Due to limited breeding farms in the world and licensed operation requirements, the scarcity of the resources of salmon is increasingly obvious. The tight balance between global supply and demand makes upstream resources the most valuable link in the whole industry chain.”
Chilean Comeback
Chile’s salmon farming industry took a major hit in 2016 when a red tide killed millions of fish, decimating the industry at a cost of approximately $800 million. This outbreak was only exacerbated by outbreaks of viruses among the country’s salmon producers. Despite this, the country’s industry has seen a resurgence, and a flurry of deals as players make strategic moves to increase their presence along the farmed salmon supply chain.
In June of this year, AquaChile signed a deal to acquire two salmon farming companies: Salmones Magallanes and Pesquera Eden for $255 million. This transaction gave AquaChile a foothold in the salmon farming sector in the southern Magallanes region of the country, a cold-water location known for being ideal for production.
Meanwhile, Agrosuper bested a field of rival bidders, including AquaChile, Blumar, Los Fiordos, Australis Seafood, and Invermar, to acquire Piscarola Hornopiren and Salmones Frioaysen for $229 million.
This deal, which was expected to close in the third quarter of this year, will give Agrosuper additional licenses to support 40 salmon farms in the Aysen region of Chile.
However, one of the biggest deals happened in August, when Chilean food giant Agrosuper announced its agreement to acquire a majority stake in AquaChile, one of the largest salmon farmers in the country, in a deal valued at US$850 million.
Amid this dynamic action, Joyvio is maneuvering to gain traction and a place of strength in the global market, and to position itself as a key supplier able to answer growing demand from Chinese consumers.
“The obtaining of upstream salmon resources will help quickly strengthen the brand and market influence of the seafood businesses of Joyvio Group and will improve its cash returns and profitability,” said the company. “As the most important strategic market of Joyvio Group, PRC has a great room for its consumption growth both in width and depth. The existing domestic and overseas presence and resources of Joyvio Group will generate synergies with [Australis] in a number of dimensions and enable [it] to achieve faster and better corporate development. In addition, the acquisition of global high-quality marine protein resources which are in short supply in the PRC is of significant importance in terms of upgrading China’s food consumption and the complementary advantages between China and Chile under the ‘Belt and Road’ initiative.”
-Lynda Kiernan