THE BOTTOM LINE
Fishing rights: Sea Harvest gains cred from Brimstone
Fisheries group nets R300m from empowerment investment crew, nicely boosting its allocation chances
Brimstone has been cautious on the deal making front in recent years, not willing to overpay for assets that have been enticingly dangled. So pumping R300m into Sea Harvest in a share subscription agreement at R14 a share is a weighty decision for Brimstone.
Essentially, the proceeds will part-fund the recent acquisition of the Ladismith Cheese Company (LCC) – a deal that market watchers still appear divided over. Clearly Brimstone believes LCC’s dairy niches are attractive over the longer term, and – more importantly – will offer Sea Harvest a profitable platform on which to build other non-seafood brands.
Gut feel is that Sea Harvest will not look for sweeping commodity plays in the food sector. So instead of pursuing opportunities in sectors like poultry the company is expected to rather gather a basket of niche brands that have margin enhancement opportunities under a larger operating structure.
With the food sector on the JSE not looking that appetising, this might be a perfect time for Sea Harvest to snatch niche food brands from some of the larger players at prices that are easy to digest.
Another key issue is that the proposed share subscription will push Brimstone’s shareholding in Sea Harvest from 50.6% to 54.2%.
Stronger empowerment credentials will be useful in the run-up to the 2020 fishing rights allocation process, where it seems likely the authorities will favour black-owned ventures and community fishing enterprises.