What happened

  • TUF bought King Oscar AS, Norway off a PE fund (The Private Equity Fund Procuritas Capital Investor IV); the deal is expected to be closed by 4Q14; Deal size: Not yet announced.
  • TUF bought a 100% stake in MerAlliance, #4 in the smoked salmon market in Europe on the 5th September, deal to be closed in 4Q14, deal size, not yet announced.tuf

First off Who’s Oscar?

  • King Oscar is one of the top 10 seafood brands in the world
    Leading position in the premium sardine segment (#1 in Norway, US and Australia)
  • Strong market positions in Norway, US, Poland, Belgium, & Australia
  • Total sales FY13 were US$ 80 mn (about 2% of TUF’s total revenue)
  • Factories are located in Norway & Poland (near the fishes)

Secondly, who’s MerAlliance?

  • #4 in the smoked-salmon market in Europe (OEM)
  • FY2013 sales: US$ 220mn,
  • Major markets: France & UK
  • Factories located @ France, Scotland, Poland
  • Benefits to TUF? Well they have MW Brands, and perhaps can use the existing distribution + marketing channels to extend MerAlliance’s products.

How is TUF paying for all this?

  • Well they make about THB 4 bn in operating CF, the past 2 years they have been spending that equivalent amount in acquisitions of PPE, plus with their Net D/E still well below 1x I wouldn’t be surprised to see a small portion of debt and the rest just financed by cashflow for these two acquisitions.

Impact to TUF?

  • TUF originally had a sales target of US$ 4bn in FY14, analysts have been projecting US$5 bn as a possibility for FY15 as result of these two acquisitions
  • Oscar adds the US$80 mn (2% of TUF’s current revenue)
  • MerAlliance adds US$220 mn (5-6% of TUF’s current revenue)

Are they going to buy anything else?

  • There were market rumours that TUF may purchase Bumble Bee which was offering itself @ US$1.5 bn ~14.5x EV/EBITDA (TUF is @ 11x EV/EBITDA). Bumble Bee is #2 in the US with 20-30% market share (TUF’s Chicken of the Sea is 15%). So briefly my thoughts are 1) Greater control of the US market if they do buy BB 2) But at what cost? Will the US Government cry foreign invasion & say TUF has a monopoly?

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