Shareholders will be voting at a special meeting in January on the $1-billion sale of Clearwater Seafoods to FNC Holdings Limited Partnership representing a coalition of Mi’kmaq First Nations and Premium Brands Holdings Corporation.
Clearwater announced on Nov. 9 that it had entered into a definitive arrangement agreement with FNC Holdings and Premium Brands Holdings Corporation to acquire all of the issued and outstanding common shares of Clearwater and the units issued under various equity compensation plans for $8.25 per share. This represents a 15 per cent premium to the closing price of Clearwater shares on the TSX on November 6, 2020, the last trading day prior to the announcement of the transaction and a 60.2 per cent premium to Clearwater’s average volume-weighted price for the 20 day period preceding the strategic review announcement on March 5, 2020.
The transaction received the unanimous approval of Clearwater’s Board of Directors and is subject to approval by Clearwater shareholders.
The Mi’kmaq First Nations Coalition and Premium Brands will each acquire 50 per cent ownership in Clearwater, the largest holder of shellfish licenses and quotas in Canada and one of North America’s largest vertically-integrated seafood companies.
“This strategic investment represents a transformational change in Canadian fisheries, catapulting First Nations into a leading global position in the seafood industry with the largest holdings of shellfish licences and quotas in Canadian fisheries,” stated a Clearwater press release.
“This is a transformational opportunity for the Mi’kmaq to become significant participants in the commercial fishery through the investment in existing infrastructure, management expertise and a global market presence,” said Chief Terry Paul, Membertou First Nation in the same press release.
“Mi’kmaq not only become 50 per cent owners of the company, but expect to hold Clearwater’s Canadian fishing licences within a fully Mi’kmaq-owned partnership. This collective investment by First Nations in Clearwater represents the single largest investment in the seafood industry by any Indigenous group in Canada. Each of Paqtnkek, Pictou Landing, Potlotek, Sipekne’katik and We’koqma’q have confirmed their intention to participate with Membertou and Miawpukek in this historic investment.”
FNC Holdings is a new legal entity formed for the purpose of the Clearwater investment. FNC Holdings was legally formed by Membertou and Miawpukek First Nation, who have taken a leading role in the transaction.
All First Nations in Nova Scotia, along with Miawpukek First Nation from Newfoundland and Labrador, were provided the opportunity to participate in the collective investment, which represents the single largest investment in the seafood industry by any Indigenous group in Canada.
The transaction will be completed by way of a plan of arrangement under the Canada Business Corporations Act, says the press release.
Completion of the transaction is subject to a number of conditions, including court and shareholder approvals and compliance with the Competition Act (Canada). The transaction is not subject to a financing condition and is expected to close in the first half of 2021.
“Clearwater is a world class seafood company with a great management team, best-in-class products and a globally respected brand. Premium Brands will use its value-add expertise, brand development capabilities and extensive customer relationships to continue to grow this leading global seafood company,” says George Paleologou, President and CEO of Premium Brands.
“We are proud to partner with the Mi’kmaq First Nations communities in this unique opportunity to enhance First Nations’ participation in commercial fisheries, at the same time building the seafood portfolio within the Premium Brand ecosystem.”
If the transaction closes on or before January 29, 2021, Clearwater shareholders will receive $8.25 in cash per Clearwater common share. If the transaction closes after January 29, 2021 but on or before April 30, 2021, Clearwater shareholders will receive $8.30 in cash per Clearwater common share. If the transaction closes after April 30, 2021 but on or before June 30, 2021, the outside date for the transaction, Clearwater shareholders will receive $8.35 in cash per Clearwater common share.
“We are very excited about working with Premium Brands and the participating communities to continue to grow and strengthen our business while preserving our culture and community presence,” said Ian Smith, President and CEO of Clearwater.
“Furthermore, this partnership ideally positions us to continue building on the legacy created by Clearwater’s founders, Colin MacDonald and John Risley.”