JBS acquisition of Huon Aquaculture advances with Australian regulator’s approval

Australia’s Foreign Investment Review Board (FIRB) has approved Brazilian meat-packing firm JBS’ acquisition of Dover, Tasmania, Australia-based salmon-farming firm Huon Aquaculture, clearing the way for the transaction to proceed.

The 25 October decision clears the way for Huon to schedule a shareholder vote on JBS’ takeover proposal, under which JBS Australia has proposed acquiring up to 100 percent of Huon by paying AUD 3.85 (USD 2.82, EUR 2.39) per share, a transaction that could cost JBS up to AUD 425 million (USD 313.5 million, EUR 266.1 million).

“The FIRB decision is another important step in securing the future of Huon, our 800-plus employees, and the hundreds of Tasmanian businesses that work with our company,” Huon Aquaculture Chairman Neil Kearney said in a press release. “In addition to its commitment to invest in the business and our people, JBS has committed to maintaining our world-leading farming practices to support long-term sustainable growth. Huon has established the highest standards of animal husbandry, biosecurity, environmental management, and sustainable farming practices and JBS will continue this uncompromising approach. Importantly, JBS also has the proven skills and expertise to access new international markets for Huon’s premium products.”

Huon shareholders will meet on 29 October to vote on whether to approve the sale, which must then be approved by an Australian court. In a statement posted to the Australian Stock Exchange, Huon said it had not received any competing proposals, despite interest from Tattarang Agrifood and Cooke Aquaculture.

JBS and Huon majority owners Frances and Peter Bender – who own 41 percent and 12 percent of the company, respectively, according to a 24 October ASX update – have agreed upon two different acquisition schemes that will be presented to Huon shareholders, which are structured similarly but which have differing tax implications for the Benders. If Huon shareholders reject both offers, Huon would remain independent and Huon would have to pay AUD 4.25 million (USD 3.2 million, EUR 2.7 million) to JBS. Huon’s board of directors “are of the opinion that the price of a Huon share on the ASX is likely to fall,” according to a prospectus on the acquisition circulated in September. The takeover schemes require 75 percent approval from Huon shareholders to be approved.

The Australian court reviewing the transaction could also reject the takeover schemes, which would result in a renegotiation of the JBS bid, likely resulting in the company deciding whether to take a majority stake in Huon without the guarantee of 100 percent ownership.

However, those possibilities are unlikely, according to Sam Baker, an adviser at Hobart, Tasmania, Australia-based Shadforth Financial. Baker told the Australian Broadcasting Corporation the lack of objection from the FIRB was the “most-significant hurdle” for the takeover.

"It now appears extremely likely that Huon Aquaculture will be taken over by JBS on Friday," Baker said.

JBS Australia CEO Brent Eastwood said his company is eager to complete the takeover.

"JBS is committed to Huon, its employees, the local Tasmanian community and the broader principles of environmental sustainability, animal welfare, safety, and social responsibility," Brent Eastwood said. "JBS has the commercial relationships and the ability to open up and access new markets which, combined with the Huon team's knowledge and expertise, create a fantastic opportunity to take this business forward.”

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