Nutreco announces today that it has signed an agreement to acquire 75% of the shares in Gisis S.A., the fish feed subsidiary of the Expalsa group. Expalsa is market leader in fish feed production and shrimp and tilapia farming in Ecuador and has strong market positions in Honduras and Peru. The acquisition of Gisis takes Nutreco into the global top three shrimp feed suppliers. The acquisition will be immediately earnings accretive.
This acquisition strengthens Nutreco's aquaculture feed business, Skretting, in Latin America, with production, sales and distribution facilities for shrimp and tilapia feed in Ecuador, Honduras, and Peru and a joint venture with Regal Springs in Honduras. Expected revenues in 2012 are EUR 160 million (2011: EUR 135 million). The total consideration for the acquisition of 75% of the shares, including corresponding net debt, is approximately EUR 78 million. Closing of the transaction is subject to gaining regulatory approval from the Ecuadorian competition authority.
Gisis employs approximately 400 people and has two feed production plants in Guayaquil, Ecuador. It produced around 200,000 tonnes of shrimp and fish feed in 2011 and 70,000 tonnes of other feeds, including 50,000 tonnes of poultry feed. The size of the shrimp feed market in Ecuador in 2011 is estimated at 350,000 tonnes. Ecuador ranks as number three in worldwide shrimp feed production after China and Thailand. Over the past five years the market has grown by approximately 8% per year and double digit growth is expected in 2012. Fish feed production in Ecuador is around 60,000 tonnes.
Part of the acquisition comprises a joint venture with Regal Springs in Honduras which is currently building a fish feed plant. Regal Springs is a leading tilapia farmer in Indonesia with operations also in Mexico and Honduras and is the world's first fish farming company certified by the Aquaculture Stewardship Council. Nutreco and Regal Springs will study further strategic relationships in Mexico and Indonesia upon closing of this transaction.
"We are very pleased with this excellent strategic acquisition. Ecuador is a major aquaculture country with strong growth. It strengthens our presence in Latin America and provides a platform for further expansion in this strategically important market. The joint venture with Regal Springs provides further opportunity for growth," said Knut Nesse, CEO Nutreco
The acquisition fits into Nutreco's strategy to capitalize on its leading fish feed positions, such as in salmon feed, and to expand into growth regions important for aquafeeds; notably for shrimp and non-salmonid fish species. The strategic target is to grow its fish feed business for non-salmonid species from 28% in 2010 to 45% of total fish feed volume by 2016. This acquisition will increase the non-salmonid share of total fish feed volume to close to 40% in 2013.
This acquisition in Latin America will increase the ability of Nutreco's aquafeed business Skretting to build on its current presence in shrimp and tilapia feed in China, Vietnam and Brazil. The added scale and breadth of operations will create opportunities to further raise quality standards and expand market shares by leveraging R&D, and now with additional focus in Ecuador on R&D for shrimp and tilapia feed. Skretting is already establishing an Aquaculture Research Centre (ARC) in southern China as part of the world-renowned Skretting ARC in Stavanger, Norway. Knowledge gained from over 20 years of R&D in fish feed is a valuable asset that will be shared.
Nutreco's 'Ambition 2016 - driving sustainable growth' is to grow and improve profitability by providing innovative and sustainable nutritional solutions for its customers. This will be realised by focusing on a higher margin portfolio of nutritional solutions such as premixes, feed specialties and fish feed, and by expanding into the growth geographies of Latin America, Russia, China and Southeast Asia, which will see the largest increases in both production and consumption of animal protein food products.
