Tassal Group (ASX:TGR) have announced this morning via the ASX that they have entered an agreement through their wholly-owned subsidiary Tassal Operations PTY Ltd to acquire De Costi Seafoods. The purchase will comprise of an upfront cash payment and an earn-out component.
Established in 1986 in Hobart Tasmania, Tassal Group’s primary focus is the hatching, farming, processing and distribution of Atlantic Salmon through out Australia and around the world. They offer salmon smoked, fresh, canned or frozen. The company announced yesterday that it has extended its partnership with Woolworths and will now also be supplying to Aldi.
Tassal’s acquisition by way of a Share Sale Agreement will comprise of an up-front cash payment and and a growth based earn-out component. The up-front cash payment will be $50million which is based on a multiple of 5 x maintainable EBITDA . The earn-out compnent will staged over three financial years from 1 July 2015 and will be payable in new Tassal shares to a value consistent with the 5 x EBITDA valuation to a maximum of 10million new Tassal shares. The up-front cash payment will be funded with debt with no capital raisings required.
Tassal’s Managing Director and CEO Mark Ryan stated “The proposed acquistion of De Costi Seafoods will build on our doemestic salmon capabilities, increase Tassal’s vertical intergration in salmon, and drive increased scale and provide Tassal with access to the broader seafood market.” The deal is yet to be completed and will not include DeCosti’s Chatswood, Bondi, and Sydney’s Fish Markets stores.
Tassal’s share price on the ASX closed at $3.12 on Monday. Since the announcement yesterday regarding Woolworths and Aldi, and todays’s news of their acquistion of De Costi, the company’s share price has jumped approximtaely 15%. Currently trading at $3.58, the market has shown positive sentiment towards Tassal’s startegies.
Author: Ben Visser
Jul 01, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.