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Largest investment in seafood industry by an Indigenous group in Canada

BLOOMBERG, NOVEMBER 10, 2020

Clearwater rises on takeover bid from Premium Brands, Mi’kmaq | Deal comes amid lengthy dispute over Atlantic fishing rights

By Marcy Nicholson for BloombergPremium Brands Holding Corp. and a coalition of Mi’kmaq First Nations agreed to buy Clearwater Seafoods Inc. for C$537 million ($413 million) in a deal touted as the single largest investment in the seafood industry by an Indigenous group in Canada.

Shares of Bedford, Nova Scotia-based Clearwater surged 13% to C$8.12 at 9:55 a.m. trading in Toronto, on pace for a three-year high. Premium Brands, based in Richmond, British Columbia, fell 2.2% to C$96.19.

Premium Brands partnered with a group led by the Membertou First Nation to acquire Atlantic Canada’s wild seafood company for C$8.25 a share, a 14% premium to Monday’s price. The transaction is valued at about C$1 billion including debt.

The buyers will each hold a 50% stake in Clearwater, which will continue to operate as a distinct entity.

“Clearwater on its own is a world-class seafood company with a great management team, best-in-class products and a globally respected brand,” Premium Brands Chief Executive Officer George Paleologou said Monday in a statement. “In partnership with us and the Mi’kmaq First Nations communities, it will become an even stronger business.”

Historic Opportunity

The proposed takeover of Atlantic Canada’s largest fishing company follows longstanding disputes between commercial fishermen and indigenous communities over fishing rights in the maritime region, with the lobster harvest being the latest flashpoint.

“This represents a historic opportunity for the Mi’kmaq to strengthen our role in Canada’s commercial fisheries,” Membertou First Nation Chief Terry Paul said in the statement. “Mi’kmaq will not only become 50% owners of Clearwater with our new partner, Premium Brands, but will proudly hold all of Clearwater’s Canadian fishing licenses within a fully Mi’kmaq-owned entity.”

The deal comes about eight months after Clearwater initiated a strategic review of ways to enhance shareholder value. The company’s board said in a statement that the proposal is in the best interests of Clearwater shareholders and recommended they approve the transaction.

”It represents great value for shareholders, leverages the expertise within the company while advancing reconciliation in Canada,” Colin MacDonald, Clearwater co-founder and chairman, said in a separate statement.

Clearwater has exclusivity on Lobster Fishing Area (LFA) #41, a massive and rich lobster fishing zone off Nova Scotia
Clearwater has exclusivity on Lobster Fishing Area (LFA) #41, a massive and rich lobster fishing zone off Nova Scotia

Share Sale

File Photo: The Clearwater Anne Risely, a state-of-the-art, $71 million deep clam fishing vessel
File Photo: The Clearwater Anne Risely, a state-of-the-art, $C71 million ($55m USD) deep sea clam fishing vessel

Premium Brands owns a range of specialty food manufacturing and distribution businesses with operations across Canada, the U.S. and Italy. The combined seafood operations of Premium Brands, Clearwater and the Indigenous communities are expected to generate more than C$1.3 billion in annual sales, with the majority outside Canada, the company said.

As part of the transaction, Premium Brands will raise C$200 million by selling shares to a group of Canadian investment banks, and will sell an additional C$50 million in stock to Canada Pension Plan Investment Board, the company said.

The transaction, which requires approval from Clearwater shareholders, is expected to close in the first half of next year.

Cormark Securities advised Premium Brands on the transaction, while RBC Capital Markets and Antarctica Advisors LLC worked with Clearwater.

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