July 2, 2018

Nissui wants to buy stake in Seafarms for A$25M

Nissui of Japan has entered into an agreement with Seafarms Group Ltd. (SFG) to acquire 14.99% of its outstanding shares for A$25 million (around 2.1 billion yen or US$18.7 million).

SFG's existing prawn farming operations in Queensland, Australia, produces more than one-third of total domestic production of farmed prawn in Australia, where the required environmental standards create high barriers to entry.

The marine products company decided to invest in SFG after it was satisfied that SFG's proposed new large-scale prawn farming project in Northern Territory of Australia, known as Project Sea Dragon, would obtain the necessary government approvals for its development. It is also of strategic significance for Nissui to secure a differentiated farmed prawn business base and products.

Project Sea Dragon Pty Ltd (PSD), a 100% subsidiary of SFG, plans to start building the black tiger prawn farming site this year and bring the product to the market by 2021. At the first year of harvest, PSD targets to produce 10,000 tonnes of quality fresh prawns.

Through this equity participation, Nissui will market the black tiger prawn products from PSD exclusively in Japan, Australia and New Zealand, on top of potential global distribution through the Nissui Global Links network.

Nissui Group will also distribute in Japan and Oceania region around 2,000 tonnes per annum of black tiger and other prawns sourced from SFG's existing Queensland prawn farming operations, including products from its complete farming cycle.

Despite a declining trend in the Japanese prawn market, expanding US, Europe and China market supports substantial demand for farmed prawns. Vannamei shrimp holds 80% of global farmed prawn market, while once-dominant black tiger prawn holds 20%.

Nissui pursues "Sophistication of Aquaculture Business" as one of the major themes in its marine products business and has already started a feasibility study of on-shore farming of vannamei shrimp for eating raw in Japan. It now invests in the development of farming businesses in the world consistent with its new mid-term plan "MVIP+2020", starting from 2018.

Nissui will develop the prawn business to be a core business in the same way as its salmon/trout and white fish businesses.