Alliance Tuna takes over NZ salmon processor

Canned tuna exporter Alliance Tuna International Inc. has signed an agreement with Prime Foods NZ Ltd. (PFNZ) to acquire a controlling stake in the New Zealand-based smoked salmon processor for NZ $1.3 million (about P36 million).

In a disclosure to the Philippine Stock Exchange, Alliance Tuna said the agreement was signed last Jan. 6 following the completion of a due diligence review of PFNZ.

Under the agreement, Alliance Tuna will acquire 50 percent plus one share of PFNZ with the investment to be released in two tranches.

The first tranche of NZ $650,000 will be invested immediately while the second tranche amounting to NZ $500,000 will be made within the year. The remaining NZ $150,000 investment will be in the form of a loan to PFNZ which shall earn an interest at market rate after the first year.

The agreement also calls for the establishment of a joint venture corporation in the Philippines which shall be controlled by the local tuna cannery firm. The proposed joint venture, which is expected to be operational towards the end of 2009, will export salmon all over the world except New Zealand, which will continue to be served by PFNZ.

Alliance Tuna said it would pay for the investment (for both PFNZ and the joint venture) through internally-generated funds.

PFNZ, established by Henry Studholme, has been manufacturing and selling smoked seafood since 1994. Its products include hot smoked, cold smoked and marinated salmon which are sold under Prime Smoke and Studholme brands.

PFNZ has grown to be one of the second largest retail suppliers of smoked seafood in New Zealand, accounting for a 35-percent market share in that country.

In addition to its own brands, PFNZ processes and packages the Signature Range house brand for Progressive Enterprises, the largest chain of supermarkets in the country.

Alliance Tuna said the investment is expected to boost its profitability since profit margins in salmon are higher than tuna, thereby ensuring future growth for the company.

In 2007, Alliance Tuna registered revenues of $42.4 million, up 36 percent from the previous year’s $31.1 million. The strong sales growth was attributed to the surge in orders from all the major markets, a wider client base and introduction of new products.

The company shipped 956 full container loads of canned tuna products in 2007, 107 containers more than 2006 shipments.

Alliance Tuna is looking at new markets such as Caspian and Kazakhstan to boost sales and expand its global market reach.

The company’s primary export markets are Europe and North America, which together account for 84 percent of its total export sales. – Zinnia dela Peña