Sea Harvest’s Bold Move: Acquisition of Terrasan Group Subsidiaries

  • Strategic Acquisition: Sea Harvest, Brimstone's subsidiary, aims to acquire key subsidiaries of Terrasan Group for R964.8 million.
  • Financial Considerations: Purchase consideration includes Sea Harvest shares and a cash payment, subject to adjustments based on net working capital.
  • Published by
    Lethabo Ntsoane

In a strategic move to expand its footprint in the fishing and aquaculture sector, Sea Harvest, a subsidiary of Brimstone Investment Corporation Limited, has announced its intent to acquire select subsidiaries of Terrasan Group Limited. This significant development was disclosed in a recent announcement by Sea Harvest on the Stock Exchange News Service (SENS).

The Acquisition Details

Sea Harvest, through its wholly-owned subsidiaries, has entered into a share purchase agreement with Terrasan Group Limited and Terrasan Beleggings Proprietary Limited. This agreement, executed on 12 January 2024, outlines the acquisition of specific subsidiaries engaged in the catching, processing, and sale of pelagic fish, as well as farming, processing, and sale of abalone.

Brimstone Shareholders are advised that the purchase consideration for this acquisition will be settled through a combination of cash and the issuance of Sea Harvest ordinary shares to Terrasan. This move will result in Brimstone’s ownership interest in Sea Harvest diluting to below 50%, leading to changes in accounting methods.

Key Entities Involved

The target entities in this acquisition, collectively referred to as the “Target Entities,” include Aqunion, a leading abalone business, and Saldanha Foods, a fishing business based on the West Coast of South Africa.

Rationale Behind the Acquisition

Sea Harvest’s strategic move aligns with its fishing and aquaculture strategy, aiming to diversify its portfolio and add a mature, cash-generating business. The acquisition is anticipated to create value for Sea Harvest and positively impact the fishing and abalone industries in South Africa. Moreover, Sea Harvest aims to broaden its shareholder base and move closer to its ambition of becoming a black-owned global seafood business.

Financial Considerations

The initial purchase consideration for the acquisition stands at R964,837,829. This amount will be settled through the issuance of Sea Harvest shares and a cash payment, subject to adjustments based on the net working capital of the Target Entities. Additional performance-linked earnouts are also part of the deal, contingent on the financial performance of the Target Entities.

Conditions and Timelines

The acquisition is subject to several conditions precedent, including shareholder approvals, regulatory clearances, and other contractual requirements. The effective date of the acquisition is 1 January 2023, with the closing date expected to be on or around 1 June 2024.

Shareholder Approval and Cautionary Announcement Withdrawal

As per JSE Listings Requirements, the acquisition is classified as a Category 1 transaction for Brimstone. Shareholder approval, with more than 50% present and voting, is required at a General Meeting. Notably, 58.4% of Brimstone Shareholders have already given irrevocable undertakings to vote in favor of the necessary resolutions. Additionally, with the detailed terms of the acquisition now disclosed, the cautionary announcement issued in December 2023 is withdrawn.

Conclusion

Sea Harvest’s acquisition of Terrasan Group subsidiaries marks a pivotal moment in the South African fishing and aquaculture industry. The move reflects a strategic vision to enhance Sea Harvest’s market position, foster industry growth, and realize its aspirations of becoming a prominent black-owned global seafood business. Shareholders await the General Meeting, which will be convened in line with JSE Listings Requirements, to approve this transformative acquisition.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo