Seachill, a leading supplier of chilled fish to the U.K. retail market and owner of retail brand The Saucy Fish Co., has been purchased by British meatpacking firm Hilton Food Group for GBP 80.8 million (USD 106.4 million, EUR 90.4 million).
Hilton confirmed the deal, which had been rumored since August 2017, in a regulatory filing posted on Wednesday, 18 October by the London Stock Exchange. Seachill was sold by the Icelandic Group, which had been seeking to offload the firm as it proceeded with a full divestment of its seafood-related business.
In the filing, Hilton CEO Robert Watson called the Seachill acquisition “a strategically and financially compelling transaction” for his company.
“The processing and supplying of fish and seafood into the U.K. is an attractive and growing market and one where we see considerable opportunities to build Hilton's business,” Watson said. “Our initial discussions with key customers support this view and we look forward to broadening our offering to both our U.K. and overseas customers alongside our existing meat business."
Seachill CEO Simon Smith will continue to lead the business as a division within Hilton, according to the filing.
The deal values Seachill at GBP 84 million (USD 110.7 million, EUR 94 million), and Hilton will fund its acquisition through a new issuance of stock valued at GBP 53 million (USD 69.9 million, EUR 59.3 million) and through a new loan issuance of GBP 34 million (USD 44.8 million, EUR 38 million).
With revenue of GBP 266.3 million (USD 340.5 million, EUR 318.4 million) in 2016, Seachill ranked as the second-largest player in the U.K. fish market. Its Saucy Fish Co. brand has become the largest chilled wet fish brand in the U.K.
Hilton’s regulatory statement revealed that the company views Seachill as an “attractive and relatively low-risk entry into the processing and supply of fish in the U.K.” In its own market research, Hilton said it has found buyers of its meat products have shown interest in adjacent categories, and that customers are seeking out fish as part of a larger shift in taste and toward food that allows them to pursue healthier lifestyles.
“This is a new category for the group and it is an attractive growth opportunity for the group,” it said. “Seachill focuses on the three largest fish species in the U.K. and has successfully innovated and developed new products including The Saucy Fish Co. brand.”
The U.K. chilled seafood market has displayed “resilient growth,” according to Hilton, with “a 20-year track record of increasing market value.”
“Customers see it as a key category, with 80 percent of shoppers buying chilled seafood and on average customers making 19 purchases and spending a total of GBP 82 (USD 108, EUR 92) per annum,” according to Hilton.
Another alluring part of the deal for Hilton is Seachill’s connections with U.K. grocer Tesco, which is its primary customer, accounting for approximately 80 percent of its net sales.
“As Tesco is also one of the company's principal customers, it is expected that the Acquisition will strengthen the Company's existing relationship with Tesco through the supply of a new product category,” Hilton’s filing said.
Moving forward, Hilton will seek to extract greater value from Seachill by pursuing a higher level of automation in its processing facilities, expanding Seachill’s sales overseas, developing new products, and expanding the Saucy Fish brand into other categories.
In trading on the London Stock Exchange on Wednesday, Hilton stock was up almost six percent to GBP 835.50 (USD 1,099.01, EUR 934.12). The stock price was at GBP 747 (USD 981, EUR 826) when rumors of the deal first leaked in August.
