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Port Lincoln-based shellfish producer Yumbah Aquaculture looks set to proceed with a $28.1 million acquisition and privatisation of sustainable aquaculture company Clean Seas Seafood (ASX: CSS) after the board unanimously backed the cash offer as being in the best interests of shareholders.
The privately-owned Yumbah, which has a national investment-grade shellfish aquaculture portfolio comprising operations in South Australia, Victoria, Tasmania and NSW, has entered a scheme implementation deed with Clean Seas Seafood to acquire all the shares in the listed company for 14c per share.
While accepting the cash offer, which is priced at a 52 per cent premium to the Clean Seas share price prior to the takeover announcement on 19 February 2025, Clean Seas has made no recommendation on the scrip alternative put forward by Yumbah.
Clean Seas Seafood, which posted a statutory loss of $32.6 million for the first half of FY25, says that shareholders who choose the scrip alternative will have “ongoing economic exposure” to the merged business.
Under the scrip alternative, Clean Seas shareholders will receive shares in unlisted new Yumbah shares.
“The merger of Clean Seas and Yumbah represents a strategic alignment that enhances operational capabilities, market reach and long-term growth potential,” says Katelyn Adams, a member of the independent committee of Clean Seas directors who assessed the Yumbah offer.
“By combining expertise in aquaculture and sustainable seafood production, the combined entity will be well-positioned as a leading provider in Australia’s aquaculture industry.”
The takeover by Yumbah comes on the heels of the Port Lincoln company’s acquisition of former ASX-listed Sydney rock oyster producer East 33 in November last year.
Anthony Hall, director and the largest shareholder of Yumbah with a 53.6 per cent interest, is Clean Seas’ largest shareholder and currently controls about 22.6 per cent of the target’s issued capital. Clean Seas director Gary Higgins is also a director and chairman of Yumbah.
Yumbah has undertaken several acquisitions over the past four years, including that of Eyre Peninsula Seafoods in 2023 which made the company Australia’s largest producer of mussels and abalone.
Clean Seas describes itself as a global leader in full-cycle breeding, farming, processing and marketing of its Yellowtail Kingfish which is renowned by leading chefs and restaurants for its exceptional quality. The company is the largest producer of aquaculture Yellowtail Kingfish outside of Japan.
The takeover by Yumbah follows a challenging period for Clean Seas which has suffered higher-than-expected mortalities within the Year Class 2024 cohort of its fish stock.
This led to an impairment of $14 million in its FY25 half-year accounts. Revenue for the period was also down 10.4 per cent to $30.5 million due to lower harvest volumes.
However, operating cash flow of $5.7 million was up $8.4 million, and free cash flow of $4.3 million was up $9.9 million which the company says reflects “strong price and efficiency improvements”.
The takeover by Yumbah remains subject to shareholder approval and other conditions which, if met, will lead to the buyout and delisting of Clean Seas Seafood from the ASX occurring in July this year.
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