Two groups of investors who hold nearly 14% of the shares in Texas-based menhaden catcher and processor Omega Protein are openly advocating for the sale of the company, saying the shares are currently undervalued.

According to two filings made last week with the Securities and Exchange Commission, the investment funds Wynnefield Partners and BLR Partners, both believe that a sale is the best option to maximize shareholder value.

Industry observers believe that Omega’s future is bright, given the rising demand for fish oil and fishmeal for aquaculture, as well as growing demand for fish oil supplements for human consumption.

Previously a requirement under the American Fisheries Act that foreign producers — who would be Omega’s most likely buyers —aren’t allowed to own more than 25% of a US company’s fishing vessel fleet, complicated the company’s sale.

However, with the recent purchase of Louisiana menhaden and fishmeal operation Daybrook Fisheries by South Africa’s Oceana Group, regulatory obstacles appear to have eased.

One industry observer, who spoke on condition of anonymity, said that given the increased interest in Omega’s products, he expects wide interest among possible buyers of the company.

“I don’t think there would be a lack of interest by any means because you have a very finite supply, especially of any significance and size, and especially Omega fits the bill,” the observer said, adding that he would “expect the deal could go for multiples of up to eight times cash flow, similar to how Daybrook was valued.”

Source: Jason Smith, Undercurrent News (8 free articles per month)