Alliance closes deal with Spence & Co.

Seafood producer Alliance Select Foods International Inc. (ASFI) closed on Thursday the $8.5-million deal to take over Massachusetts-based salmon processor Spence & Co. Ltd.

This will enable ASFI to get a significant piece of the regional salmon market and diversify into the branded food business.

In a disclosure to the Philippine Stock Exchange, ASFI said it had signed the acquisition deal in Braintree in the United States.

“With this acquisition, ASFI is now a major player in the smoked salmon business in the region. It will also enable the company to establish presence in the lucrative US seafood market,” the company said in the disclosure.

The deal also paves the way for ASFI to go into the branded food business. ASFI is currently focused on manufacturing tuna as a while-label producer for the brands of other companies.

The consolidation of Spence into the local company is seen enhancing ASFI’s operating margins as it starts selling its own brand.

The acquisition was funded through bank credit and infusion of fresh funds raised through an equity offering.

ASFI said it had earmarked $4.5 million from a recent stock rights offering for this transaction, the bulk of which had been disbursed as the deal was closed.

The company snagged Spence at a good price as it paid less than the total sales of around $10 million to $11 million per year, said an industry source privy to the transaction. The source noted that similar deals in the US are usually priced at levels matching the investee company’s turnover.