Benchmark will acquire the business through its wholly-owned subsidiary, Genética Spring S.A.S.
Completion of the transaction is conditional upon certain legal formalities and is expected to occur before the end of August.
The acquisition adds a third species, shrimp, to Benchmark’s aquaculture breeding business in salmon and tilapia, and strengthens Benchmark’s position in the fast-growing shrimp industry.
Benchmark has a unique opportunity to utilise the global distribution channels within its Advanced Animal Nutrition division (INVE Aquaculture), which will provide routes to market for its shrimp genetics and offer opportunities for cross-selling.
The acquired business, headquartered in Punta Canoa, near Cartagena in Colombia, operates breeding programmes for the species (L. vannamei) dominating the global shrimp sector, as well as for the marine finfish species cobia and grouper.
The advanced shrimp selection programme has been particularly successful, and has bred populations with high level of resistance to certain of the major diseases affecting the shrimp industry worldwide. It is estimated that up to 40 per cent of tropical shrimp production (>$3bn) is lost annually to disease, and according to the World Bank, production of farmed shrimp is expected to grow by 50 to 60 per cent through to 2030.
An experienced team of world-renowned scientists will join Genética Spring as part of this transaction. The team have a long standing relationship with Benchmark’s Breeding & Genetics division, and the breeding programme will continue to benefit from the advanced genetic selection services offered by Benchmark’s aquaculture genetics technology business Akvaforsk Genetics Center (AFGC). This existing relationship will also ensure smooth integration of the business into the Benchmark Group.
Of the $2.17m total consideration approximately $1.33m relates to freehold land and buildings at Punta Canoa, and the balance to the breeding programme and other operational assets. Of the total consideration, US$0.35m is retained until such time as certain legal formalites related to the real estate are completed and US$0.57m is deferred, conditional upon specified operational milestones being achieved within 18 months of completion.
Up to US$0.45m of the deferred consideration is payable in Benchmark shares, calculated by reference to the volume weighted average price (VWAP) of the Benchmark shares during the five business days which precede the final 3 business days prior to satisfaction of the deferred consideration. Benchmark has the option to settle this amount in cash. Management expect the acquisition to be significantly earnings enhancing from 2018.
Commenting on the acquisition, Malcolm Pye, Chief Executive of Benchmark said: “This important acquisition strengthens our unique package of products and services that are urgently needed in the aquaculture industry today. It adds the third major aquaculture species shrimp to our already strong aquaculture breeding business in Salmon and Tilapia, and increases our market penetration into the fast-growing shrimp industry. There is strong and growing customer demand globally for disease resilient shrimp, which are more robust and deliver better yields. This acquisition provides us with very high calibre broodstock to meet that need, offering a substantial commercial opportunity for the Company and enhancing our growing reputation in aquaculture breeding and genetics.”