Clearwater Seafoods to acquire Macduff Shellfish Group, one of Europe’s leading wild shellfish companies

Fri, 09 Oct 2015


HALIFAX, Oct. 9, 2015 /CNW/ – (TSX: CLR):

  • Strengthens Clearwater’s leading global market position in complementary premium wild seafood with an immediate 20% expansion of supply (approx. 15 million lbs) of high quality shellfish including; scallops, langoustine, whelk and crab
  • Purchase price of £94.4 million plus approximately £4 million in seasonal working capital debt agreed with existing owners, the Beaton Family and Change Capital Partners
  • Projected sales for year ended September 30, 2015 of approximately £52 million with £9.2 million of adjusted EBITDA projected to grow by 25% to £11.5 million in 2016 from recent investment in complementary shellfish species
  • Expected to be accretive in 2016 to adjusted earnings of CAD $0.17 on a per share basis
  • Attractive near term opportunities for future growth in adjusted EBITDA from harvesting, processing, marketing, sales and distribution; and
  • Expected to close on or before October 30th, 2015.

Clearwater Seafoods ("Clearwater") announced that it has entered into an agreement with the Beaton Family and Change Capital Partners, the private equity fund, to acquire 100% of the shares of Macduff Shellfish Group Limited ("Macduff"), the United Kingdom’s leading vertically integrated shellfish company, for a purchase price of £94.4 million plus approximately £4 million in seasonal working capital debt for a total of £98.4 million. In addition, there may be additional consideration paid in the future dependent upon on the future performance of Macduff.

Ian Smith, CEO of Clearwater Seafoods said, "The acquisition of Macduff brings together two of the world’s leading and fastest growing vertically integrated wild shellfish harvesters. The transaction will allow Clearwater to integrate its vessel management and sustainable harvesting practices, innovative processing technologies along with its global sales, marketing and distribution footprint into Macduff; a company that already possesses a talented local management team, excellent resource assets and a strong presence in the EU, the world’s largest and most valuable seafood market.  Our companies have been building a working relationship for more than three years and we are confident Macduff represents a highly attractive investment with a strong strategic fit for Clearwater." 

Euan Beaton, President of Macduff Shellfish Group said,

"Having reached our goal of building a £52 million business, we had one suitor in mind which shares our vision and values to enable us to accelerate our growth on a global scale.  With a similar vertically integrated business model, sustainability at its heart, sound employee practices and strong relationships with fishermen but operating on a much bigger scale, Clearwater is an ideal fit for Macduff. 

"This deal is great news for our operations in the UK, bringing investment and access to new markets within an extremely successful and respected business.  It provides learning and development opportunities for our staff as we share best practice with Clearwater and it gives fishermen access to more markets."

Steven Petrow, Partner at Change Capital Partners, said,

"When we invested in Macduff in 2011 there was a compelling opportunity to transform the business through international expansion and strategic acquisitions. This has been a very successful investment and we are convinced that the next chapter in the company’s history will be very exciting."


Macduff brings abundant access to additional seafood supply in key markets and channels along with a well-established brand, UK-based harvesting and processing expertise, a strong local management team and a talented workforce.

The acquisition of Macduff will significantly enhance Clearwater’s scale, and provide opportunities to access additional supply to accelerate the growth of revenues, profit and free cash flow. The transaction:

  • Provides access to market leading supply to attractive complementary species including King and Queen scallops, langoustine, brown crab and whelk.
  • Provides Clearwater enhanced access to key distribution channels, including food service and grocery retail, in multiple markets including the UK, Italy, Spain and Portugal.
  • Expands the distribution of Macduff products with Clearwater providing deeper market access as well as sales and marketing strength in North America and Asia, especially Japan and China.
  • Expands Clearwater’s North Atlantic harvesting operations and provides integrated UK-based primary and secondary processing capabilities and expertise with land-based processing facilities in Scotland; and
  • Creates a new growth platform for Clearwater. Macduff has grown rapidly over the past four years, has identified multiple growth opportunities and is the fishing company best positioned to lead and benefit from future investment.


For the year ended September 30, 2015 Macduff is expected to generate approximately £52 million of sales and £9.2 million of adjusted EBITDA representing annual growth of 13% and 30% respectively.

In June 2015 Macduff acquired an additional 4 scallop trawlers and licenses (bringing their fleet to 14 mid-shore scallop harvesting vessels) along with additional preferred procurement access in complementary shellfish species (i.e. whelk). This recent investment along with additional organic growth are projected to help Macduff grow adjusted EBITDA another 25% to £11.5 million in fiscal 2016. In addition Clearwater has identified further opportunities to invest that will enhance volume, revenue, margins and adjusted EBITDA in 2016 and subsequent years.

Taking into account the £94.4 million purchase price (which excludes approximately £4 million in seasonal working capital debt) and the pro-forma 2016 adjusted EBITDA of £11.5 million, management estimates the effective acquisition multiple on the transaction is approximately 8.2 times adjusted EBITDA. The transaction is expected to be accretive to adjusted EBITDA in 2016 by up to CAD $0.38 per share and adjusted earnings by up to CAD $0.17 per share.


Macduff will be acquired for cash consideration of £71.4 million, and an unsecured deferred consideration obligation of £27 million (the "Deferred Consideration") that includes a contingent consideration component.

Clearwater will finance the cash portion of the acquisition from existing loan facilities.

The Deferred Consideration applies to 33.75% of the shares acquired by Clearwater (the "Earn Out Shares"). The deferred consideration will be paid over the next five or six years.

In each year the holders of the Earn Out Shares can elect to be paid up to 20% of the total respective Earn Out Shares.  Clearwater will have the right to exercise the payout of 20% of the total Earn Out Shares annually commencing two years after the date of closing and annually thereafter. 

The amount of each Deferred Consideration payment will be as follows:

The greater of:



£5.4 million; OR


6.75% of the equity value of the business calculated as 7.5x the last twelve months adjusted EBITDA less the outstanding debt of MacDuff. 


Leverage is expected to increase with pro-forma leverage of approximately 5.3x at closing decreasing to below 4.5x by December 31, 2015 and below 4.0x by December 31, 2016 when Clearwater and Macduff see the full realization of recent investments and organic growth.  As a result, management expects to operate above its leverage target of 3.0x with the intention of returning to this goal over the course of two to three years.


Closing of the transaction is subject to customary conditions and is scheduled for October 30th, 2015. 

There are no pending regulatory approvals.


Clearwater will hold a conference call for analysts and investors today (October 9, 2015) at 1:00 p.m. (Eastern Daylight Time) to discuss this announcement in further detail.  To join this conference call, within Nova Scotia dial (902) 455-3592 and within North America dial (888) 231-8191.  To join this conference call from within the United Kingdom dial 0-800-051-7107.

Presentation slides for the conference call are available on the Company’s website located at

To ensure your participation, please dial in five minutes prior to the scheduled start of the call.  You will be required to identify yourself and the organization on whose behalf you are participating. 

If you cannot participate in the live mode, a replay will be available until January 8, 2016.  To access the replay, please dial  (855) 859-2056 and enter passcode 55503728.


This news release makes reference to several non-IFRS measures to supplement the analysis of Clearwater’s results. These measures are provided to enhance the reader’s understanding of our current financial performance. They are included to provide investors and management with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a consistent basis for comparison between periods. These non-IFRS measures are not recognized measures under IFRS, and therefore they are unlikely to be comparable to similar measures presented by other companies. 

Management believes that in addition to sales, earnings and cash provided by operating activities, non-IFRS measures are useful terms from which to determine Clearwater’s ability to generate cash for investment in working capital, capital expenditures, debt service, income tax and dividends.

These non-IFRS measures can include gross margin, adjusted EBITDA, free cash flow, leverage, adjusted earnings and return on assets. Refer to non-IFRS measures, definitions and reconciliations in the Management Discussion and Analysis ("MD&A") for further information.

Adjusted EBITDA is defined as EBITDA excluding items such as severance charges, gains or losses on property, plant and equipment, gains or losses on quota sales, refinancing and reorganization costs.  In addition recurring accounting gains and losses on foreign exchange (other than realized gains and losses on forward exchange contracts), have been excluded from the calculation of adjusted EBITDA.  Unrealized gains and losses on forward exchange contracts relate to economic hedging on future operational transactions and by adjusting for them, the results more closely reflect the economic effect of the hedging relationships in the period to which they relate.  In addition adjustments to stock based compensation have been excluded from adjusted EBITDA as they do not relate to the operations of the business.

Leverage is defined as adjusted EBITDA less minority share of adjusted EBITDA divided by debt (less Clearwater’s share of cash).

Free cash flow is defined as cash flows from operating activities, less capital expenditures (net of any borrowings of debt designated to fund such expenditures), scheduled payments on long term debt and distributions to non-controlling interests.  Items excluded from free cash flow include discretionary items such as debt refinancing and repayments, changes in the revolving loan and discretionary financing, investing activities and cash settled stock based compensation.


This news release contains "forward-looking information" as defined in applicable Canadian securities legislation. All statements other than statements of historical fact, included in this release, including, without limitation, statements relating to Clearwater’s acquisition of Macduff, financing of the acquisition, enhancement of Clearwater’s scale of operations and accelerated growth, as well as expectations regarding sales, adjusted EBITDA, adjusted earnings and leverage, constitute forward-looking information that involve various known and unknown risks, uncertainties, and other factors outside management’s control.   Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect including, but not limited to, Clearwater’s ability to successfully integrate the business of Macduff as planned, total allowable catch levels, selling prices, weather, exchange rates, fuel and other input costs.  There can be no assurance that such information will prove to be accurate and actual results and future events could differ materially from those anticipated in such forward-looking information.  Risk factors that could cause actual results to differ materially from those indicated by forward-looking information contained in this press release include risks and uncertainties related to: (i) the timing to consummate the acquisition, (ii) diversion of management time and attention on the acquisition, (iii) any disruption from the acquisition affecting relationships with customers, employees or suppliers, (iv) the timing and extent of changes in interest rates, prices and demand, and (iv) general worldwide economic conditions and related uncertainties.  For additional information with respect to risk factors applicable to Clearwater, reference should be made to Clearwater’s continuous disclosure materials filed from time to time with securities regulators, including, but not limited to, Clearwater’s Annual Information Form.

The forward-looking information contained in this release is made as of the date of this release and Clearwater does not undertake to update publicly or revise the forward-looking information contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

No regulatory authority has approved or disapproved the adequacy or accuracy of this news release.


Clearwater is one of North America’s largest vertically integrated seafood companies and the largest holder of shellfish licenses and quotas in Canada. It is recognized globally for its superior quality, food safety, diversity of species and reliable worldwide delivery of premium wild, eco-certified seafood, including scallops, lobster, clams, coldwater shrimp, crab and groundfish.

Since its founding in 1976, Clearwater has invested in science, people and technological innovation as well as resource ownership and management to sustain and grow its seafood resource. This commitment has allowed it to remain a leader in the global seafood market and in sustainable seafood excellence.

Further information is available on Clearwater’s website at


Macduff Shellfish Group ("Macduff") is one of Europe’s leading wild shellfish processors and is a vertically integrated business, owning 14 mid-shore scallop harvesting vessels and production plants in Mintlaw and Stornoway, Scotland.

The business specializes in scallops, langoustines, whelk and crab, has sales of approximately £52 million and trades globally, employing over 400 people at the seasonal peak.

Macduff has been an active consolidator in the UK fishing sector in recent years acquiring Scott Trawlers, Saltire Fisheries, four vessels and a whelk procurement and distribution business from The Greendale Group and the former Young’s Seafood factory in Stornoway.

The business was set up in 1985 by the Beaton family in Macduff, buying and selling live shellfish direct from the fishermen for freight to Europe.  The factory in Mintlaw was bought in 1996 as the company diversified from chilled into frozen shellfish, the mainstay of its current operation.

Further information is available on Macduff’s website at


Founded in 2003, Change Capital is a private equity partnership, dedicated to making investments in consumer-oriented businesses across the European lower mid-market. The firm brings both capital and operational experience to enable brands and retail concepts that have established a distinctive customer proposition to secure the next stage in their development.

The firm has so far deployed c. €440 million through 13 acquisitions across Europe. Its portfolio is diversified by geography, sector and investment holding period.

Change Capital Partners is registered in the UK and is authorized and regulated by the FCA.

Further information is available at


SOURCE Clearwater Seafoods Incorporated

View the Clearwater website as

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