DURBAN – Tiger Brands has decided to offload its 5.9 percent stake in Oceana Group for a total consideration of R581.44 million, in a move described as exiting its non-core assets.
Tiger Brands first informed its shareholders toward the end of November last year that its board had decided to pursue an unbundling of Tiger Brands’ shareholding in Oceana.
It said yesterday that it had received and accepted a conditional, but binding offer from Brimstone Investment Corporation to acquire 8 million ordinary shares in Oceana for R72.68 a share, which was based on the 10-day volume weighted average price of an Oceana share, calculated up to the close of trading on January 23. Tiger Brands is expected to further offload the remaining stake in Oceana later this year.
“Tiger Brands is proceeding with the necessary steps to complete the unbundling of the remaining 49.10 million Oceana shares during the second quarter of the 2019 calendar year,” Tiger Brands said.
Brimstone will increase its stake in Oceana from 16.98 percent to 22.88 percent once the transaction is concluded.
The completion of the transaction is subject to the fulfilment of certain conditions, which include Brimstone getting approval from the JSE and any other regulatory authority. The conditions are expected to be fulfilled at the end of February.
“Brimstone has been invested in Oceana for 23 years and continues to believe in the future of Oceana, and Brimstone considers it important to further strengthen Oceana’s B-BBEE credentials,” it said. The group said the transaction would further strengthen Oceana’s BEE ownership profile.
Oceana’s core business is the catching, processing, marketing and distribution of canned fish, fish meal, fish oil, lobster, horse mackerel, squid and hake. The business includes mid-water fishing, deep-sea trawling and inshore fishing for pelagic fish. Oceana also provides refrigerated warehouse facilities and logistical support services.
Ron Klipin, a senior analyst at Cratos Capital, said the rationale for Tiger Brands’ sale of Oceania was recently signalled as a non-core asset. “The business model does not fit the profile of the company, as it is highly cyclical, dependent on fish quotas which are highly regulated. In addition, the quantum of fish caught is impossible to determine,” Klipin said. He said that this was also why AVI were looking to exit their investment in I&J fishing.
“Brimstone, a BEE diversified investment holding company, will be adding to its holdings in Oceana and has the right credentials,” Klipin added.