August 15, 2011

 

Alliance Select acquires US$8.5-million smoked salmon processor

 

 

Alliance Select Foods International Inc (ASFI), a seafood producer, has finalised a US$8.5 million-deal to purchase Spence & Co Ltd, a major smoked salmon processor.

 

ASFI will thus get a change to take over a sizeable chunk of the regional salmon market and diversify into the branded food sector.

 

In a disclosure to the Philippine Stock Exchange, ASFI said it signed the contract in Braintree, Massachusetts, where Spence is based.

 

"With this acquisition, ASFI is now a major player in the smoked salmon business in the region. It will also enable the company to establish presence in the lucrative US seafood market," the company said.

 

Alliance Select is at the moment concentrating on manufacturing tuna as a while-label producer for the brands of other companies.

 

By consolidating Spence into the company, ASFI's operating margins as it starts selling its own brand will improve.

 

The acquisition was paid for through bank credit and infusion of fresh funds raised through an equity offering.

 

ASFI said it had put away funds worth US$4.5 million from a recent stock rights offering for this acquisition, most of which had been disbursed as the deal was completed.

 

According to an industry source privy to the transaction, ASFI absorbed Spence at a good price, as it paid less than the total sales of around US$10 million to US$11 million per annum. The source noted that similar deals in the US usually go for prices at levels corresponding with the investee company's turnover.

 

Spence's financial and operating results will be consolidated into ASFI's financial statements.

 

Jonathan Dee, ASFI president and chief executive, earlier said the purchase would double earnings to US$3.2 million in 2011 from last year's US$1.6 million.

 

Upon the consolidation of Spence, which boasted net sales of some US$11.3 million in 2010, Alliance Select's sales are foreseen to spike up to US$78 million this year from US$48.36 million last year.

 

Spence specialises in the production of smoked salmon and seafood in the Scottish tradition, using farmed Atlantic salmon (Salmo salar). Its state-of-the-art smokers are imported from the UK and are located South of Boston.