Fishing and seafood distribution company Mareterram (ASX: MTM) looks set to be acquired by its major shareholder South Africa-based Sea Harvest Group.
The ASX junior emerged from a trading halt this morning to announce it had entered into a binding bid implementation agreement with Sea Harvest, which currently has a 56.28% shareholding, for an all-cash off-market takeover offer at $0.25 per share.
This effectively values the entire shared capital of Mareterram at about $38.6 million, with the offer representing a 22% premium to the last traded price of $0.205 and a 31% premium to the 30-day volume weighted average price of $0.19.
Mareterram directors not affiliated with Sea Harvest, which represent 1.7% of shareholders, announced their intentions to accept this “attractive offer” and unanimously recommended that shareholders also accept in the absence of a superior proposal.
According to the company, shareholders (excluding the non-affiliated directors) representing 19% also intend to accept the offer.
Mareterram’s board has set up an independent board committee to handle the negotiations.
The bidder’s and target’s statements are anticipated at the end of this month.
Mareterram’s target statement is expected to include a report by an independent expert weighing in on whether the offer is fair and reasonable.
Revenues plunge in challenging season
This proposed offer comes a week after Mareterram released its 2018 full-year results, reporting a dramatic drop in annual profit due to what it described as a “challenging season” in the Shark Bay prawn managed fishery.
Annual revenue fell by almost $3 million to $44.87 million while net profit after tax plunged 78% from $1.51 million in 2017 to just $330,000.
Catch volumes also dropped below expectations, with 35% less prawns caught (although the average size of the prawns had increased) and disappointing volumes of scallop and mackerel.
Looking ahead, Mareterram said it is considering a range of strategies to optimise prawn spawning, recruitment and protection to ensure a rebound in prawn catch rates at its Shark Bay fishery.
The company also undertook significant restructure and cost reduction initiatives over the last 12 months and stated its plan to maintain the reduced level of overheads in 2019.
Mareterram shares shot up 17.07% to $0.24 on the proposed takeover announcement by afternoon trade.