Cooke looks to buyouts of shrimp farms, US downstream firms with salmon valuations high

BRUSSELS, Belgium -- The acquisitive CEO of Cooke Aquaculture is looking to deals for shrimp farms and also US multi-species processing and distribution companies, with asking prices on salmon farms set high.

Photo: Shrimp farm, Thailand. Source: Ross Davies, Undercurrent News

Blacks Harbor, Canada-based Cooke has already diversified from farming salmon on the east coast of North America into an international group covering wild catch and downstream processing, but CEO Glenn Cooke is just getting going. At the end of 2017, Cooke inked a $500 million deal for Omega Protein to go into upstream into fishmeal and fish oil.

This follows an expansion into wild Alaskan seafood with group company Cooke Seafood’s deal for Icicle Seafoods; scallops in the US and Argentina with the Wanchese Seafood Company buyout; and hake in Uruguay with the acquisition of Fripur.

The “two focuses are upstream deals on raw material, then the downstream side, in processing and distribution”, Glenn Cooke, CEO and co-founder of the company, told Undercurrent News in an interview at the Brussels seafood show.

“There are limited openings for salmon farming acquisitions, so, we keep on looking at other species and categories,” he said.

“Yes, we’re looking at deals on the [shrimp] farming side. It’s in its early stages. We’re keeping our eyes open for more volumes,” he told Undercurrent.

The rationale is based around the dominance of shrimp and salmon in North American seafood sales. Also, he said the company is looking to increase its position in wild shrimp, which it entered through an investment in Canada’s Newfound Resources several years ago.

“We do some wild shrimp harvesting now and shrimp is one of the top categories for most distributors and retailers. Owning the raw material and resource allows us to do what others can’t,” he said.

Going into shrimp farming is part of the global, resource-focused acquisition drive from Cooke, he said.

“Owning the raw material is very important for a company. If you’re a major processor and you don’t have tie to raw material, your future is very limited,” he said. “If you are going to own the processing and the sales, you have to own the raw material.”

Cooke declined to comment more specifically on the company’s aspirations to get into shrimp farming, which is mainly done in Asia and Latin America.

Downstream deals

Cooke, which expanded in processing in the US with the Wanchese deal, is also looking at acquisitions in this part of the value chain. Last year, Cooke was linked to a deal for the US assets of Macknight Food Group, a salmon processor. The talks ended with no deal, however.

The company has also been mentioned as a possible bidder for Young’s Seafood in the UK, where Cooke already owns salmon farms and has publically stated its intention to get closer to the market. Cooke declined to comment on this, however.

However, he was open about the company’s general plan downstream.

“As a company, we are looking at how to get closer to the company through ownership of processors or distributors,” he said. “You get major distributors who sell to the restaurant and retail trades, that type of company is very interesting. We own a distributor in Atlantic Canada and we like that model, so we are looking at growing that [in the US].”

Also, the company is having some success with its skin-pack program of farmed and wild salmon and scallops, which are being produced in the Wanchese plant in Suffolk, Virginia. Cooke is also keen to support this growth through acquisition.

“We are seeing a lot of North American growth in skin-pack and tray pack, there’s a lot of opportunity in these,” he said.

The range is “nationally available in the US” and also Canada, said Andrew Young, the top sales executive for Cooke.

“Growth is much faster than is expected. The limitation is trying to keep up with demand. In the longer term, we have to expand”, hence the eye on acquisition openings, he said. Also, Cooke is starting to sell skin-pack products into China.

Cooke’s upstream plans support its downstream strategy.

“The key with us is we are more than salmon. We do all the wild species, crab, scallops, whitefish, so we can offer the customer a wide range. Salmon is a big category, but so is everything else,” he said.

Salmon farming M&A

Although Cooke would like to get into salmon farming in Norway, the only major production country the company does not already operate in, openings for mergers and acquisitions (M&A) are limited.

“In Norway, there are not openings for M&A, the small guys don’t want to sell and the big guys are listed. When you are in a super cycle, it’s a tough time to buy. It’s not that we wouldn’t be interested; the entry point is the issue,” Cooke told Undercurrent.

In Chile, where Cooke operates as Salmones Cupquelan, the company has been linked to the sale process for Salmones Friosur.

“You have to presume we’re active; I’m not going to say we’re active on that one [Friosur]. As a family, we’re not issuing dividends; we’re putting the money back into the growth of the business,” Cooke said.

Prices for Chilean salmon make it much more favorable to invest now.

“The Chilean industry has to make money and they have to make normal margins. Those normal margins came back in 2017 and in 2018. I’m a believer we’re at the new norm [with current prices],” said Cooke. “Demand is strong, the US economy is humming pretty good, with all the new product development all companies are putting in. Then, all the Asian demand is coming on.”

Cooke has also acquired a processing plant in Chile from Marine Harvest, which it had been upgrading.

“Yes, the plant we bought is up and running and working well. We’re not smoking yet, it’s doing whole fish fillets and portions. We have more capacity for growth as we ramp up. Almost all of the production has been moved into the factory, as we wait for approval to export to some markets, like Brazil,” he said.

Cooke had also expanded into salmon farming on the west coast of the US, in Washington state, with the Icicle deal. However, state legislators voted to phase out non-native fish farming -- meaning Atlantic salmon -- by 2025 on March 22, after a furor over an escape from a Cooke farm in August 2017. The company has said it will respect this and could look to farm other species using the assets, but has not commented further on its plans. During the interview in Brussels, Cooke declined to comment on the issue.