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Tassal Group Limited: From Salmon to a Broader Seafood Market
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Reference: IVEY-9B19M054-E
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Year: 2018
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Number of pages: 13
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Geographic Setting: Australia
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Publication Date: Jun 17, 2019
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Fecha de edición: Jun 17, 2019
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Source: Ivey Business School (Canada)
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Type of Document: Case
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Industry Setting: Agriculture, Forestry, Fishing and Hunting;
Description
In July 2015, Tassal Group Limited (Tassal) announced the acquisition of De Costi Seafoods Company (De Costi) in a combination deal of cash and shares. The acquisition would allow Tassal to address a A$4.3 billion Australian seafood market that was much larger than the previously addressable salmon market of $700 million. Tassal had previous experience in species diversification. However, the environmental impacts of its major operations in Macquarie Harbour had been under the scrutiny of the Australian authority. Given the critical harbour issues, should Tassal continue to expand overseas? What were the motives to acquire De Costi? Did Tassal have sufficient capabilities and resources to cope with the high demand for Tasmanian salmon, particularly in the Asian market?
Learning Objective
The case is intended for a senior undergraduate- or graduate-level course on mergers and acquisitions, competitive strategies, or corporate finance. After completing this case, students will be able to do the following: ·Analyze the acquirer company’s and the target company’s competitive position, and explain each company’s motives and challenges. ·Describe the synergy creation in the acquisition deal from the viewpoint of both the acquirer company and the target company. ·Evaluate the terms of the acquisition deal, including the upfront payment and contingent payouts in terms of cash and stock, given the valuations of the acquirer and target companies. ·Analyze the rationales for corporate diversification in terms of product and market. ·Analyze strategic assets development (internal development versus external sourcing), the market entry mode choice (alliance versus acquisition), and vertical integration (supply chain). ·Evaluate the impacts of government, non-governmental organizations, and communities on a company’s resources, strategies, performance, and sustainability in environmentally sensitive industries.