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With $314 Million, Global Meat Giant Moves to Dominate Fish Sector, Acquires Second Largest Salmon Producer

Global meat giant, JBS, is currently enlarging into the fish protein sector. It says it has agreed to acquire Huon Aquaculture, the second largest salmon producer in Australia, for $313.5 million.

JBS is promoting itself on its website as believing that adherence to sustainability principles in all of its operation promotes innovation and the continuous development of its business. ‘’Such commitment, translated into our Environmental Policy, is the foundation for the Environmental Management System (EMS), certified by ISO 14001.’’

The adoption of good governance practices and social and environmental management has presented itself as a successful strategy in developing initiatives that add value to the company’s products and shareholders.

Operations are carried out with responsible use of natural resources, food security, promotion of animal welfare, compliance with internal guidelines and the strengthening of partnerships.

Such performance is the result of a uniform management model, which prioritizes the sustainable development of businesses based on accepted sustainability criteria and standards, as Dow Jones Sustainability Index (DJSI), the Corporate Sustainability Index (ISE), the Global Reporting Initiative (GRI) and the UN Global Compact.

The group is also a founding member of both the Committee and the Executive Council of the Global Roundtable for Sustainable Beef, in the United States – and is currently responsible for chairing that body – and member of the Working Group of Sustainable Livestock (GTPS) in Brazil.

Through these institutions, JBS is in continuous dialogue with non-governmental organizations, such as the World Wildlife Fund (WWF), Solidaridad, the National Wildlife Federation (NWF), and The Nature Conservancy (TNC).

However, JBS is 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.

Tomazoni says“this is a strategic acquisition, which marks the entry of JBS into the aquaculture business. 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 $11.1 million and $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 investing $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 this year a loss of S$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 $2.84, this transaction equals a 61 percent premium over its share price of $1.76 on February 26, when a strategic review was undertaken. The deal also includes a per-share dividend of $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.

Huon Managing Director and Chief Executive, Peter Bender, 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 and 2024, to reach 4.7 million tons.

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

CEO of JBS Australia, Brent Eastwood, said “there is huge complementariness with the other business we carry on in Australia, including customer relationships, distribution, and marketing. 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.”

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