Huon Aquaculture shareholders approve JBS takeover

Huon Aquaculture shareholders have approved a takeover bid by JBS Australia, a subsidiary of Brazilian meatpacking giant JBS.

At a 29 October company meeting, Huon shareholders offered more than 90 percent support to concurrent acquisition proposals put forth by JBS, which has agreed to pay AUD 3.85 (USD 2.82, EUR 2.39) per Huon share, a transaction worth around AUD 425 million (USD 313.5 million, EUR 266.1 million).

“Today’s overwhelming shareholder support for the JBS transaction will secure the future of Huon, the company’s dedicated workforce and the hundreds of Tasmanian businesses that work with us,” Huon Chairman Neil Kearney said in a statement. “Not only is it a great outcome for shareholders, it’s the right outcome for the business. We are delighted that shareholders have endorsed the proposed transaction and we look forward to working closely with JBS on the ownership transition.”

On 25 October, Australia’s Foreign Investment Review Board (FIRB) chose not to object to the deal, clearing the way for the transaction to proceed. Huon must still receive a court order to approve the bid, but with shareholder approval of both proffered schemes, the company could still have its primary scheme rejected while receiving approval for the secondary scheme. The hearing will take place on Wednesday, 3 November by Judge John O'Callaghan of the Federal Court of Australia, Melbourne Division. JBS has also engaged in an off-market takeover bid, being run in parallel to its public offering, as a back-up measure in case its primary and secondary takeover schemes are not approved by the court.

Dover, Tasmania, Australia Huon operates 13 marine aquaculture sites farming salmon and trout, three processing facilities, and sales and marketing vehicles. It has a projected harvest of 35,000 metric tons (MT) in fiscal year 2021. It projects operating earnings for 2021 of between AUD 15 million and AUD 20 million (USD 11.1 million and USD 14.8 million, EUR 9.3 million and EUR 12.4 million). 

Throughout JBS’ takeover attempt, it has been dogged by criticisms from Australian billionaire Andrew “Twiggy” Forrest and his investment firm Tattarang Agrifood, which upped its ownership stake in Huon to 18.5 percent over the past three months as a means of exerting influence on the terms of the deal. In a 27 October statement, Forrest reiterated his demand that JBS commit to higher animal welfare standards across its operations.

“Until JBS S.A declares its unequivocal commitment to adopt the same animal welfare – including the principle of ‘no pain, no fear’ – and environmental sustainability standards as JBS Australia across their global operations, Huon shareholders have no certainty for the future of the company under JBS Group’s control,” Forrest said. “My message to these massive protein producers remains clear: your animals deserve [‘no pain, no fear’] in their life cycle, and your customers expect you to change the management of your business to accommodate this. Only a clear commitment by JBS S.A in respect to its global operations would give Tattarang sufficient confidence to reconsider its position.”

While Forrest threatened to vote against the deal, Tattarang ultimately voted in favor of it, apparently satisfied by a statement issued by JBS on 28 October confirming its commitment to the so-called “five freedoms” animal welfare standards, which include freedom from hunger, thirst, discomfort, pain, injury, disease, fear, and distress, as well as the freedom to express normal behavior.

“JBS unequivocally supports the principle of ‘no pain, no fear’ animal welfare across its global operations,” it said via a Huon press release. “This commitment extends to Huon, where JBS intends to build on the company’s strong foundations and uphold the highest standards of fish health and sustainable farming practices, from water management to animal welfare, net zero emissions and stocking densities.”

If the deal is consummated, Forrest will net around AUD 12 million (USD 9 million, EUR 7.8 million), and Huon owners Peter and Francis Bender, who collectively owned 51 percent of Huon, will earn approximately AUD 220 million (USD 165.4 million, EUR 143.1 million) as a result of the sale, according to the Australian Financial Review.

In his statement, Forrest said Tattarang has committed AUD 100 million (USD 75.2 million, EUR 65.1 million) to developing a new land-based finfish farm in Australia “to give consumers a sustainable alternative to current marine-farming practices.” Forrest said project scoping and feasibility studies have already commenced and that next steps would include site selection and construction.

“I didn’t invest in Huon to create a rival takeover proposition. I invested in Huon because I believed they wanted to be leaders in truly sustainable salmon farming. But the industry change I want to achieve goes beyond just one company, in one jurisdiction,” Forrest said. “We invested to bring the true impacts of nearshore farming to policy makers’ attention, to bring the credentials of certification arrangements into review, and for the real standards of animal welfare practices to be highlighted. Through our investments, we have put an immovable spotlight on the true, long-term sustainability of the Tasmanian salmon industry and the [‘no pain, no fear’] management of animal to protein by multi-nationals. It is now at the top of the agenda for the Australian community and government.”

Photo courtesy of Huon Aquaculture