What happened

• TUF bought King Oscar AS, Norway off a PE fund (The Private Equity Fund Procuritas Capital Investor IV); the deal is expected to be closed by 4Q14; Deal size: Not yet announced.
• TUF bought a 100% stake in MerAlliance, #4 in the smoked salmon market in Europe on the 5th September, deal to be closed in 4Q14, deal size, not yet announced.

First off Who’s Oscar?

• King Oscar is one of the top 10 seafood brands in the world
  Leading position in the premium sardine segment (#1 in Norway, US and Australia)
• Strong market positions in Norway, US, Poland, Belgium, & Australia
• Total sales FY13 were US$ 80 mn (about 2% of TUF’s total revenue)
• Factories are located in Norway & Poland (near the fishes)

Secondly, who’s MerAlliance?

• #4 in the smoked-salmon market in Europe (OEM)
• FY2013 sales: US$ 220mn,
• Major markets: France & UK
• Factories located @ France, Scotland, Poland
• Benefits to TUF? Well they have MW Brands, and perhaps can use the existing distribution + marketing channels to extend MerAlliance’s products.

How is TUF paying for all this?

• Well they make about THB 4 bn in operating CF, the past 2 years they have been spending that equivalent amount in acquisitions of PPE, plus with their Net D/E still well below 1x I wouldn’t be surprised to see a small portion of debt and the rest just financed by cashflow for these two acquisitions.

Impact to TUF?

• TUF originally had a sales target of US$ 4bn in FY14, analysts have been projecting US$5 bn as a possibility for FY15 as result of these two acquisitions
• Oscar adds the US$80 mn (2% of TUF’s current revenue)
• MerAlliance adds US$220 mn (5-6% of TUF’s current revenue)

Are they going to buy anything else?

• There were market rumours that TUF may purchase Bumble Bee which was offering itself @ US$1.5 bn ~14.5x EV/EBITDA (TUF is @ 11x EV/EBITDA). Bumble Bee is #2 in the US with 20-30% market share (TUF’s Chicken of the Sea is 15%). So briefly my thoughts are 1) Greater control of the US market if they do buy BB 2) But at what cost? Will the US Government cry foreign invasion & say TUF has a monopoly?