August 9, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Global meat giant JBS is expanding into the fish protein sector, and has agreed to acquire Huon Aquaculture, the second largest salmon producer in Australia, for A$425 million (US$313.5 million). 

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, this deal marks the first foray for São Paulo-based JBS into direct seafood production.

“This is a strategic acquisition, which marks the entry of JBS into the aquaculture business,” said Tomazoni. “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).

“Huon has 33 years of experience in sustainable production, superior technology, and superior-quality products widely recognized by the Australian consumer, in an industry with excellent growth prospects worldwide,” said Tomazoni.

Despite this, and despite investing A$350 million (US$258.3 million) over the past five years in upgrades to its infrastructure and sustainability practices resulting in bigger and healthier fish, Huon has been under financial pressure due to the global pandemic and subsequent low demand and price cuts. These conditions led Huon to announce in February of this year a loss of A$95.3 million (US$53.6 million) for its H1 2021 balance sheet.

This deal represents certainty for Huon shareholders noted company chairman Neil Kearney, saying, “Having fully considered a range of alternatives as part of a comprehensive strategic review process, the board believes this transaction provides Huon shareholders with an opportunity to realize significant value for their shares.”

At a per-share price of A$3.85 (US$2.84), this transaction equals a 61 percent premium over its share price of A$2.39 (US$1.76) on February 26, when a strategic review was undertaken. The deal also includes a per-share dividend of A$0.125 (US$0.1).

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 an anticipated shareholder meeting this October.

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.”

Notwithstanding global pandemic conditions beyond our control, salmon farming brings great potential for growth. Since 1980, global consumption of salmon has more than tripled as demand for protein also climbs. And as wild stocks grow more depleted, salmon farming is stepping in to bridge the gap between market demand and production, with expectations that the market volume will grow at a CAGR of 3.9 percent between 2019-2024 to reach 4.7 million tons. 

And considering the highly complementary nature of Huon with JBS’ existing businesses in-country, JBS fully expects continued growth for Huon and its protein business.

“There is huge complementariness with the other business we carry on in Australia, including customer relationships, distribution, and marketing,” said Brent Eastwood, CEO, JBS Australia. “Our acquisition of Huon enables us to further grow our Australian protein business and strengthen our presence with consumers and customers. We look forward to continue growing on the leading salmon business Huon has created and working with its employees, customers, and stakeholders to help the company realize this next phase of growth.”

– 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.