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Premium Brands Holding Corp. and a coalition of Mi’kmaq First Nations have agreed to buy Clearwater Seafoods Inc. for $ 537 million in a deal touted as the largest investment in the seafood industry by an indigenous group in Canada.
Shares of Clearwater, headquartered in Bedford, Nova Scotia, were up 13% to $ 8.12 at 9:55 am in Toronto, a three-year high. Premium Brands, headquartered in Richmond, British Columbia, fell 2.2% to $ 96.19.
Premium Brands has partnered with a group led by Membertou First Nation to acquire Atlantic Canada’s wild seafood company for $ 8.25 per share, a 14% premium over Monday’s price. The transaction is worth approximately $ 1 billion including debt.
Each of the buyers will have a 50% stake in Clearwater, which will continue to operate as a separate entity.
“Clearwater alone is a world-class seafood company with a great management team, the best products and a globally respected brand,” said George Paleologou, CEO of Premium Brands, in a statement Monday. “In partnership with us and the Mi’kmaq First Nations communities, it will become an even stronger business.”
Historic opportunity
The proposed acquisition of Atlantic Canada’s largest fishing company follows long-standing disputes between commercial fishermen and indigenous communities over fishing rights in the maritime region, with lobster harvesting being the latest sticking point.
“This represents a historic opportunity for the Mi’kmaq to strengthen our role in Canadian commercial fisheries,” Membertou First Nation chief Terry Paul said in the statement. “Mi’kmaq will not only own 50% of Clearwater with our new partner, Premium Brands, but will proudly hold all of Clearwater’s Canadian fishing licenses within a wholly owned entity of Mi’kmaq.”
The deal comes about eight months after Clearwater began a strategic review of ways to increase shareholder value. The company’s board of directors said in a statement that the proposal is in the best interest of Clearwater’s shareholders and recommended that they approve the transaction.
“It represents great shareholder value, leverages the experience within the company while driving reconciliation in Canada,” Colin MacDonald, co-founder and president of Clearwater, said in a separate statement.
Sale of shares
Premium Brands owns a number of specialty food manufacturing and distribution businesses with operations in Canada, the United States and Italy. The combined seafood operations of Premium Brands, Clearwater and indigenous communities are expected to generate more than $ 1.3 billion in annual sales, with most of it outside Canada, the company said.
As part of the transaction, Premium Brands will raise $ 200 million by selling shares to a group of Canadian investment banks and sell an additional $ 50 million in shares to the Canada Pension Plan Investment Board, the company said.
The transaction, which requires approval from Clearwater’s shareholders, is expected to close in the first half of next year.
Cormark Securities advised Premium Brands in the transaction, while RBC Capital Markets and Antarctica Advisors LLC partnered with Clearwater.
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