Two weeks ago big fish and canned tuna giant Bumble Bee Holdings was snagged by one of the more modest fish in the sea and the marketplace, Canadian sardine producer Connors Bros. Income Fund.
Connors, which operates the Stinson sardine cannery in Prospect Harbor among other holdings, entered into a complex $385 million agreement with San Diego-based Bumble Bee that would result in Bumble Bee going public by having the holdings of both companies being listed under the Connors Bros. Income Fund. This was a smart move by the company’s management, which less than a year ago, took over the company (together with a venture capital investor) from Conagra.
Securities filings indicate the combined revenues of the two companies for the year ending in September 2003 total $918.1 million. A breakdown of that figure indicates that tuna alone contributed 59 percent of the total. Herring and sardines, Connors’ specialty, accounted for only 16 percent of revenues. Two varieties of salmon made up 11 percent and specialty seafood products made up the remainder.
Given that some of the sardine total was sales of Bumble Bee herring, it is apparent that Connors Bros. is in the company of a comparative giant in the deal. However, the little sardine company from Blacks Harbour, New Brunswick, is a leader in its own right. Securities filings indicate that Connors Bros. products account for 78 percent of the sardine’s sold in Canada and 53 percent of the U.S. market. Since going public in 2001, when it was spun off from Canadian food giant George Weston, Connors has become the largest producer of canned sardines in the world.
Bumble Bee is the second largest producer of canned tuna in the U.S. market and ranks first in the production of canned salmon, albacore tuna and specialty seafoods.
Fraser MacLeod, vice president for human resources at Connors Seafood, explained the reasoning behind his company’s unlikely match with Bumble Bee. “Both companies were looking for opportunities to expand their bases,†he said. “Bumble Bee is primarily in tuna and salmon, where we are larger, by far, in the sardine category,†he said. Among other advantages, MacLeod said, the new company will “cover the whole spectrum of canned seafood.â€
For someone selling sardines, it means going to grocers with all the clout of the major tuna producer behind you. Indeed, a quick survey of labels in any local market indicates the new company will dominate the canned fish displays. Some of the brand names of the combined company include Brunswick, Beach Cliff, Port Clyde, Clover Leaf and Bumble Bee.
In the securities filing for the transaction, the companies predict growth in specialty seafood products and into the refrigerated and frozen seafood market. The companies envisage savings in general and administrative expenses, sales expenses, storage and distribution facilities, and purchasing when their operations can be combined.
The new company will be headed by Bumble Bee president and CEO Christopher Lischewski. Connors CEO Edward McLean will become executive vice president, sardine operations and procurement. Headquarters will be maintained in San Diego and New Brunswick.