With the acquisition of Copeinca, Cooke surpasses Tasato become the world’s largest producer of fishmeal and fish oil, according to Undercurrent News sources

Canadian seafood giant Cooke’s near-$1 billion acquisition of Peru’sCopeinca, announced on Thursday (Nov. 7), as reported by Undercurrent News, marks a significant shift in the global fishing industry.

The acquisition cements Cooke’s position as the world’s largest producer of fishmeal and fish oil, positioning it as a key supplier for aquaculture and global feed producers, overtaking Peru’s largest fishmeal producer, Tasa, several industry executives tell Undercurrent. Cooke also owns Omega Protein Corporation in the US.

In a telephone interview Friday (Nov. 8), Ignacio Kleiman, managing partner of Antarctica Advisors, a Miami, Florida-based financial advisory firm specializing in the seafood sector, emphasized this acquisition’s “strategic” importance. It connects “the northern hemisphere producer with the southern hemisphere producer,” he said.

Antarctica Advisors and Deutsche Bank are handling the Copeinca sale on behalf of the investment firms Davidson Kempner Capital Management and Monarch Alternative Capital, which took control of Copeinca’s then-parent CFG Investment in 2021. CFG was formerly part of the Hong Kong-based Ng family’s now-defunct Pacific Andes group empire, which began bankruptcy protection proceedings in 2016.

The magnitude of the deal can’t be overstated.

Copeinca, established in 1994, has grown to become Peru’s largest fishing company, with 2,770 employees, 45 vessels and eight processing plants spanning Peru’s north and center coastline. It holds the largest anchovy quota in Peru at 15.9% and processes approximately 21% of the country’s total catch for annual production of roughly 200,000 metric tons of fishmeal and 23,000t of fish oil, according to Cooke.

Meanwhile, Peru’s second anchovy season is underway. Between Nov.1 and Nov. 7, the fishing sector has already caught 248,199t, equivalent to 10% of the vast quota set by the country’s production ministry in late October, according to Undercurrent sources.

Meanwhile, the integration across hemispheres won’t just be geographic. It also provides stability to Copeinca, which has faced years of financial uncertainty, Kleiman said.

“This gives Copeinca a very bright future in the hands of Cooke,” he said. “It’s a great company with excellent management, and Cooke will ensure it has a stable and promising path forward.”

Cooke’s acquisition marks a significant leap in vertical integration for Cooke, Kleiman said. It allows the company to hedge fishmeal and fish oil prices, which are critical feed ingredients in its aquaculture operations.

“If you’re on both sides of the equation regarding fish feed pricing, you manage to stabilize your margins, creating a more resilient business model,” he noted.

By controlling an extensive supply chain share, Cooke can buffer price volatility, which benefits its financial stability in the aquaculture market.

A potential catalyst for change

Kleiman also highlighted that this acquisition could prompt broader changes within the Peruvian fishing sector, noting that the deal is”great for the industry as a whole.”

Copeinca’s entry into Cooke’s operations might attract additional strategic investors looking to consolidate or partner with local players, many of which have long sought foreign investment without success, he said.

“Some of Peru’s leading fishmeal companies have been open to deals for over a decade,” he noted without naming any firm in particular.

Cooke’s entry might spur other global players to follow suit, Kleiman said. The acquisition could set a precedent for foreign-led consolidation, reshaping Peru’s fishing industry by bringing in more external capital and expertise. Such developments could offer the Peruvian sector an opportunity for modernization.

“The announced acquisition by Cooke of Copeinca means a lot for the Peruvian industry and the country, in addition to what it means for the company itself,” agreed Peruvian fishing expert Pablo Trapunsky, former CEO of another fishmeal producer, Pesquera Diamante.

“After more than 10 years of the CFG take over [of] Copeinca by a hostile offer at the Oslo Stock Exchange, we finally reach the last chapter of this history. The Canadian seafood company Cooke steps into the Peruvian Fishing industry and will indeed change the whole game since the group also controls Omega Protein in the US, which also produces fishmeal and fish oil, same as Copeinca,” Trapunskywrote on LinkedIn.

Trapunsky also believes that this deal will “definitely change” the industry.

“Cooke is acquiring roughly 21-22% of the Peruvian fishmeal and oil production. But Peru accounts for roughly 25% of world production. So, it means about 5-6% of world production, and you have to add the products produced in the US by Omega Protein. That’s huge,” he wrote.

“And for the industry, it will mean regaining value as the products become more and more relevant, especially crude fish oil. We saw last year what happened there due to El Nino. We just wish all the best to Cooke on this adventure and also to all Copeinca’s workers, who can now focus 100% on their performance.”

El Nino’s minimal impact on deal viability

Peru’s anchovy harvest has been impacted by weather fluctuations over the last year, which caused the cancellation of the first anchovy season in 2023, but Kleiman downplayed the effect of recent El Nino events on this transaction.

“When El Nino hits, the fish don’t die: They move away,” he said.

This year’s anchovy season, which started strong after last year’s downturn, was a reminder of the industry’s resilience and ability to recover quickly, Kleiman said.

In his view, the Cooke team skillfully navigated the complexities of the Copeinca acquisition, dealing with financial and structural challenges that made the deal more intricate.

He declined to give Undercurrent additional details or discuss the agreed upon price. He only commented that “it was a very complex deal,” crediting Cooke’s diligence and Copeinca’s strong management.

 

SOURCE: Undercurrent News