Sanford reels in Simunovich

By IRENE CHAPPLE


Listed fishing company Sanford is close to swallowing its smaller competitor, Simunovich Fisheries, in a move that reflects a drive toward consolidation in the troubled industry.

Sanford said it was in the "closing stages" of buying Auckland-based Simunovich and had also bought a 25 per cent stake in a seafood processing company in China.

Sanford is buying Simunovich's fishing and scampi quota, vessels, equipment, workshop facilities and other operational assets.

Sanford managing director Eric Barratt said it would apply, as required by law, to the Fisheries Minister to buy the remaining Simunovich quota which it was barred from owning due to aggregation rules.

The name Simunovich would carry on, subject to how the market responded, although its managing director, Peter Simunovich, would not be joining Sanford.

He, with three other senior executives, were being made redundant through the sale process.

Simunovich said he had already been considering restructuring the business but felt, after being approached by Sanford, that a sale was the best approach.

Sanford's purchase will add about 6000 tonnes of quota to its 140,000 tonnes but its value - much of the quota is for scampi - would be high, Barratt said.

Barratt would not disclose the cost of the purchase, but it has been funded from cash reserves and some debt. The cost will eventually be made public however, because it is more than 10 per cent of the company's $430 million market capitalisation.

The company also disclosed it had bought 25 per cent of Weihai Dong Won Foods, based in Weihai in the north-eastern part of Shandong province, China.

The Sanford investment is part a capital raising for the company from US$5 million ($7.63 million) to US$7.2 million.

Barratt said the purchase was to allow for cheaper processing of goods and gave Sanford a leg into the Chinese market.

The purchases come just months after negotiations for a merger between Sanford and Sealord fell over.

The Simunovich deal should be completed by October 1, the beginning of the fishing year.

While Barratt said the deal was simply an opportunity which Sanford took up, consolidation is seen as essential in the industry which has struggled in an unfavourable global climate and is expecting significant hoki quota cuts.

Consolidation is also on the agenda for Aotearoa Fisheries, a new umbrella company which part owns Sealord.

Sanford shares closed up 17c to $4.50 yesterday on the news of the double purchase.