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Mareterram's James Clement (left) with David Lock. Photo: Attila Csaszar

Mareterram targets growth through acquisition

Fremantle-based seafood producer Mareterram has examined more than 30 potential acquisition opportunities in the past couple of years as it seeks to grow into a larger diversified business focused on protein.

Mareterram managing director David Lock said acquisitions were the whole reason the company existed, with the aim to increase market capitalisation, bring on institutional investors and diversify.

"(We want) to take Mareterram from being a seafood business (operating) in Shark Bay with national distribution to being a much larger, diversified agribusiness," Mr Lock told reporters during a tour of the company's facilities in Carnarvon yesterday.

"We want scale. We want to reduce our reliance on one fishery."

The business operates a prawn trawling fleet and base that had existed previously under the banner of Norwest Seafoods and catches between 1,500 tonnes and 2,000t of seafood per annum.

Mr Lock said agricultural commodities from goats to sunflower seeds would be in the company's sights for expansion, but it would be a matter of getting the right fit.

The sweet spot would be for a business with enterprise value between $20 million and $50 million, he said.

"We probably would not go a lot smaller than ($20 million)," Mr Lock said.

"Small acquisitions are just as hard as large acquisitions."

Opportunities might be in primary production, such as growing macadamia and almonds, or even in value-added processing such as marinating goat meat.

Mr Lock said Mareterram had a full pipeline of opportunities and was undertaking due dilligence on a handful of businesses, having already passed over or been knocked back by 30 different potential targets.

Rearing sheep and beef were not on the menu, however, with competition from billionaires in this space too substantial, he said.

Closer to its existing brief, opportunities in fisheries and seafood were also under consideration, Mr Lock said, including operators in other managed fisheries.

"Some (fishing businesses) would require new vessels," Mr Lock said.

"Not all the fisheries we've looked at, we like."

Many family-owned fishery players that had built up portfolios over generations were now for sale because they did not have appropriate succession plans, he said.

Financing
Getting cash for acquisitions would not be an issue, Mr Lock said, with Mareterram having a strong majority shareholder that was supportive of the strategy.

South African company Sea Harvest holds 56 per cent of the company, secured through a proportional takeover in 2016.

Mr Lock said Sea Harvest would chip in half the equity needed for any acquisition it approved of, while banks had been keen to offer debt funding.

The remainder of any capital needed for expansion would be relatively easy to stump up, he said.

Mareterram had a market capitalisation of around $43 million, at the close of trading on Monday.

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Mareterram (MTM)

Share Price

Closing price for the last 90 trading days
Source: Morningstar

Total Shareholder Return as at 31/01/18

1 year TSR5 year TSR
157thIMF Bentham85%17%
411thDreamscape Networks7%0%
450thMareterram0%163%
520thCirrus Networks-10%-29%
544thVEEM-14%0%
709 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

14/12/17
$4k Bought
14/12/17
$25k Bought
14/12/17
$28k Bought
Total value as at the date of the transaction
Source: Morningstar

Revenue

50th↑Cirrus Networks$55.3m
51st-IMF Bentham$54.4m
52nd↑Mareterram$50.7m
53rd↑Dreamscape Networks$46.5m
54th↑VEEM$41.2m
234 listed industrial companies ranked by revenue.
Source: Morningstar

Remuneration from Mareterram

43rdDavid Lock$1.150m
195thJames Clement$574k
367thMark Pitts$127k
Ranked by total remuneration from all listed WA companies

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