Sea Harvest goes fishin’ down under


Sea Harvest goes fishin’ down under


Published Date: 2022-01-12 | Source: INCE|Community | Author: The Finance Ghost

Sea Harvest goes fishin’ down under

Sea Harvest Group has agreed to acquire Western Australian fishing operation MG Kailis Holdings.

Other than serving as an excellent reminder of our sensational retired cricketer with a similar name and an incredible knack for growing back his hair, MG Kailis is a vertically integrated prawn and fish trawling, trading and engineering business.

It has over 50 years of experience in dodging all the Australian wildlife that tries to eat you at every opportunity.

This is in line with Sea Harvest's strategy of investing in international businesses of suitable scale in high value seafood species. MG Kailis complements the existing operations that the group has in Australia and offers some diversification within its operations, as the prawn and trawled fish operations are in different regions in Western Australia.

The maximum purchase price is AUD70 million, which will be subject to working capital adjustments as is customary in such transactions. In other words, the final price is based on any movements in the balance sheet between now and the effective date, as the company continues trading.

The net asset value of the operations is just over AUD32 million and the profit after tax for the year ended June 2021 was AUD6.3 million. I'm no expert in this industry, but that seems like a rather full price to me with a Price/Earnings (P/E) ratio of over 11x.

Several conditions precedent must be met for the deal, ranging from regulatory consents through to an agreement that the Managing Director of the business will remain employed for at least 18 months to help integrate the businesses with Sea Harvest's existing operations.

The effective date for the deal is 1 April 2022. No, it isn't an April Fools' joke.

Brimstone Investment Corporation (which is also a listed group) holds 54% of Sea Harvest Group. Its share price closed 6.5% higher on the day (welcome to the illiquid end of the market) and Sea Harvest Group closed more than 2% lower.


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