September 29, 2011

Clearwater Seafoods rejects Cooke Aquaculture's bid

The board of Clearwater Seafoods Income Fund board has formally rejected Cooke Aquaculture's takeover bid.

The Halifax company said it believes the CAD3.50 (US$3.39) per unit offer - valuing Clearwater at about CAD97.1 million (US$94.2 million) - "does not adequately reflect the value of the fund and its future prospects."

John Risley, president of Clearwater Fine Foods Inc., which holds 48.2% of the fund's voting units, stated last month that he believed the deal would not succeed.

Privately owned Cooke, led by CEO Glenn Cooke, primarily farms salmon. The company announced its hostile bid August 12 and Halifax-based Clearwater announced a unitholder rights plan three days later to fend off the takeover bid from the New Brunswick company.

The poison pill plan allows unitholders to acquire units at an 80% discount if Risley's company increases its stake or if someone else acquires ownership of at least 20% of the fund's voting units.

Cooke has said it welcomes the plan because it prevents insiders from buying more shares to block a potential bid.

Risley has said Cooke's offer is too low, as Clearwater is in the midst of a recovery. It is also in the process of transforming itself from an income fund to a publicly traded corporation.