Pacific Andes: Going into the salmon business

December 9, 2010 14:32

Pacific Andes Resources Development (PARD) has announced the acquisition of a 19.76% stake in ASX-listed Tassal Group Limited (Tassal) for A$51.7m (or S$67m), reports with reference to Pacific Andes.

Tassal is a vertically integrated salmon grower, processor, seller and marketer. According to management, Tassal is also Australia's largest producer and marketer of salmon with brand names such as Tassal Pure Tasmania, Tasmanian Smokehouse, twiceaweek and Superior Gold. It employs over 650 people and harvests over 12,000 tonnes of salmon per annum. Tassal's 5-year EBITDA CAGR growth rate is 34% and this reached A$50.3m in FY2010. The acquisition of Tassal is priced at A$1.79 per share (or a 3.2% premium over yesterday's closing price of A$1.735). PARD will be financing this transaction from its own internal sources. We view this deal positively as it offers a complementary fit into PARD's current operations. In addition, we reiterate our view that consumption of seafood is still on an uptrend and this transaction will aid its positioning in this sector in the coming years. For the near term, we do not see any significant financial impact, but we also do not discount the possibility of future business synergies and opportunities as it deepens its presence in the fishing sector. For now, we retain our estimates. We have a BUY on PARD with a fair value estimate of S$0.40.

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