Brimstone casts net for more Oceana shares
The empowerment stalwart has proposed spending R581m to acquire 8-million shares from Tiger Brands
Empowerment stalwart Brimstone Investment Corporation is scaling up its fishing interests by angling for more shares in Oceana Group, Africa’s largest fishing enterprise.
Fishing industry sources say the deal is critical in reinforcing Oceana’s empowerment credentials ahead of the 2020 long-term fishing rights allocation process. “It adds stability to Oceana,” one noted.
On Thursday Brimstone proposed spending R581m to acquire 8-million shares in Oceana from majority shareholder Tiger Brands, the sprawling household goods business. The deal is based on an Oceana share price of about R72.68 a share.
Brimstone is a big player in the local fishing sector, with a controlling stake in recently listed fishing business Sea Harvest, and it already holds a 17% stake in Oceana.
Oceana was one of Brimstone’s first investments when the empowerment venture was launched in the mid-1990s.
Brimstone’s decision to cast for more shares follows a decision late in 2018 by Tiger Brands to unbundle its 42% shareholding in Oceana to shareholders.
In November Tiger CEO Lawrence MacDougall said the perennially profitable Oceana was “not strategically right” for Tiger to hold a majority stake. He reckoned the unbundling would return the best value to investors.
If the proposed deal with Brimstone is concluded, the empowerment company will increase its stake in Oceana to 22.88%, effectively becoming the anchor shareholder.
Oceana’s staff also hold a 10% stake in the business via the Oceana Empowerment Trust.
While Oceana rates highly in empowerment rankings, the company’s black equity ownership is markedly below those of listed rivals Sea Harvest and Premier Fishing & Brands.
Sources also noted that the proposed deal confirms Brimstone’s position as the dominant fishing-sector player on the JSE. But they believe Brimstone is unlikely to increase its stake in Oceana beyond 25%, and that there might be a possibility to unbundle all or part of this shareholding to its shareholders at a later stage.
Oceana’s best-known business is the Lucky Star canned pilchard brand, an affordable staple for many SA households. The group also holds fish meal and fish oil interests in the US as well as lobster, horse mackerel, squid and hake quotas locally.
Oceana also provides cold-storage services and logistics.
Sea Harvest is best known as a hake business but its recent acquisition of Viking Fishing and the Ladismith dairy business has added considerable diversity. Sea Harvest also has substantial interests in Australia via ASX-listed Mareterram.
Tiger Brands indicated it would bank a capital profit of R256m on the deal, and that the unbundling of its remaining 49.1-million Oceana shares should be completed by the end of the second quarter.