Benchmark Holdings plc Acquisitions of AFGC and Spring Genetics

Posted: 27th July 2015 08:28

Benchmark is pleased to announce the acquisitions of the entire issued share capital of Norwegian aquaculture genetics and research business Akvaforsk Genetics Center AS ("AFGC") and 80% of the issued share capital of Akvaforsk Genetics Center Inc. ("Spring Genetics"), a US based tilapia genetics and breeding business (the "Acquisitions") for a combined initial consideration of NOK 140m (c. £11.0m), satisfied from existing cash balances.

Expanding on Benchmark's position as the second largest global player in salmon breeding and genetics, the Acquisitions represent a strategic move into aquaculture genetics across a wider number of the major farmed species, and into breeding in the fast growing tilapia sector.

The Company continues to experience strong performance in its Breeding and Genetics Division and maintained the substantial recovery of its sales of Byelice/Salmosan in Chile as announced in the Interim results. Together with the continued progress of the pipeline, Benchmark remains on track in the delivery of its overall growth strategy.


The Acquisitions:

·    Are expected to be earnings accretive (before amortisation of acquired intangibles) in the year ending September 30th, 2016

·    Enhance Benchmark's position as a leader in the aquaculture genetics space, with new customers across new geographies and species

·    Create multiple opportunities for immediate synergies across the Benchmark Group

AFGC is a leading provider of technical genetic services, with long term customer contracts across many aquaculture species in Norway, Canada, Thailand, China and the USA. Customers include Marine Harvest (salmon), Nireus (sea bream and sea bass), Hainan Progift Aqua-Tech and Manit Farm (tilapia), Stolt Sea Farm (turbot) and SalmoBreed1 (salmon).

Spring Genetics, which is based in Miami and Mazatlan, Mexico, has built a strong brand in a rapidly growing market as one of only a handful of independent tilapia primary breeding companies. Spring Genetics is predominately focussed on the USA and Latin America where it has multiplier and hatchery customers in Brazil, Mexico, Guatemala, Belize and El Salvador.

Rabobank forecasts global Tilapia production will grow from 4.5m tonnes in 2012 to more than 9.0m tonnes by 20252, with volumes in the key Latin America market forecast to increase nearly five-fold from 453k tonnes in 2012 to 2.0m tonnes by 20252.  For comparison global salmon production was 2.0m tonnes in 2013 and is forecast to be 3.0m tonnes in 20203.

The combination of AFGC and Spring Genetics with Benchmark's existing activities in this specialist field creates a leading expert in aquaculture genetics and breeding, fulfilling the Company's strategic objective to offer genetic expertise across a more diverse range of species in the aquaculture industry. This is a major step towards building the platform from which Benchmark will provide sustainable food chain solutions which integrate the key components of animal health; genetics, animal husbandry, health products and nutrition.  

Benchmark has identified significant revenue and operational synergies between the Acquisitions and the Benchmark Group, including the existing genetics businesses, SalmoBreed and Stofnfiskur, which were acquired in December 2014. AFGC and Spring Genetics will join these companies as subsidiaries of Benchmark's Breeding & Genetics division.

Benchmark Chief Executive, Malcolm Pye, commented:
"This deal is an opportunity for Benchmark to further advance its position in the aquaculture genetics and breeding sector. The acquisitions bolster our recognised status in the salmon genetics space, and moves Benchmark into the rapidly growing tilapia market."

"The acquisitions of AFGC and Spring Genetics give Benchmark access to new geographies and customers in emerging markets, diversify our offering and fulfil Benchmark's strategic objective of offering our expertise across a range of species within the aquaculture arena. The entrance of the Company into the tilapia market is particularly encouraging, as it is one of the fastest growing sources of protein in the Latin American region."

"This is a very exciting time for the Company, with Benchmark's Breeding & Genetics division going from strength to strength over the past year. We are now positioned as one of the leading global players in the aquaculture genetics sector, and we look forward to further growing this division of the business."

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