SEAFOOD.COM NEWS by John Sackton — Aug 15, 2013 — Sources with knoweldge of the offer say that High Liner has made an unsolicited offer to purchase American Seafoods operations in New Bedford.
American Pride produces scallops, breaded and battered fish, and other value added products. In 2012, American Pride acquired Good Harbor Seafoods of Gloucester, another value added processor.
No spokesperson from either American Seafoods or High Liner would comment on this.
However, High Liner has made no secret of their desire to continue making acquisitions. CEO Henry Demone said "We remain committed to achieving our 2013 strategic goals, which as disclosed previously are: profitable growth, through organic sales growth, acquisitions and operating efficiencies."
In the latest quarter, High Liner acknowledged a drop in sales volume from 61.3 million pounds to 58.8 million lbs.
This drop in sales volume is affecting the entire category of value added seafood. With no overall growth in the category, major companies are primarily fighting to take market share from each other. This can be very detrimental to profitablity over time, as it gives buyers more leverage. This dynamic is what has been driving the consolidation in the sector through acquisitions and plant closings.
A non-exhaustive list of plant closings would include High Liner's Danvers plant; Coldwater Seafoods plants closed in prior years by Icelandic, and the Good Harbor plant in Gloucester, closed by American Seafoods in 2012.
With Trident's commitment to build up their value added business through a major new plant in Georgia, announced yesterday, the landscape in value added seafood will just get more competitive.
In this environment, High Liner may feel compelled to keep purchasing value added competitors so as to maintain their sales levels and retain customers, as well as improve pricing power.
American Seafoods got into value added processing in New Bedford with the American Pride plant, which does both breaded and value added fish and scallops. However, the company is now nearing the point where they need to refinance their debt load, and a sale of assets may be attractive. In 2012, their total revenue was $533.6 million, of which $369.4 million was at-sea processing revenue.
If these figures reflect the rough breakdown of American Pride sales vs. at-sea processing sales, it would seem that American Pride revenues may be in the $100 to $150 million range; and any offer from High Liner would likely be at a high multiple, meaning one times sales or higher, for example.
Other High Liner acquisitions, including the acquisition of Icelandic, began as unsolicited purchase offers.
This story originally appeared on Seafood.com, a subscription site. It is reprinted with permission.