Clearwater Fine Foods Inc. / Fishery Products International Ltd. 

Objective

With the announcement from the Chairperson of Fishery Products International Ltd. (FPI) on the 6th September 2001 at St. John's, Newfoundland to acquire the assets of Clearwater Fine Foods Inc. for Cdn$510 million, it would result to create the largest seafood company in Canada.  The transaction is still pending from the approval of the governmental regulatory bodies and shareholders.  A business case study would be beneficial to demonstrate this venture with the impact of the employees, the assessment of market share increases and its national and international competitors.  This study also reviews the potential obstacles that might jeopardize the completion of the merger.

Research members

Dr. Daniel Lane - Supervisor
Arthur So - Research Assistant
 

Background

FPI, a giant seafood company of St. John's, Newfoundland, was formed in 1984 by a special provincial statue which limits a single shareholder from owning more than 15 per cent of voting shares.  The company harvests and processes mainly groundfish and shellfish and also involves in the distribution of valued and commodity seafood over 15 countries.  FPI employs about 3400 people and operates 9 plants.  It is a publicly traded company on the Toronto Stock Exchange since 1987.   The annual sales of the year 2000 was about $750 million with the net income of $13.6 million.  The 6th September 2001 announcement of the agreement in principle to acquire Clearwater Fine Foods Inc. by Mr. Derrick Rowe, Chairperson of FPI Ltd. and Mr. John Risley, President of Clearwater Fine Foods Inc. has raised the issues of the monopoly of Canada's seafood industry.  The study will analyze the impact of the consumers pricing and the stability of employment in both companies while creating Canada's largest seafood company to complete effectively in the international level of countries such as Japan, China, Europe and the USA.

Clearwater Fine Foods Inc., a private company of Bedford, Nova Scotia, was formed by Mr. John Risley in 1976 with his brother-in-law, Mr. Colin MacDonald in the lobster-buying business.  Since then, the company has transformed into an international success story employing over 1800 people and operates eight shore-based processing plants in Atlantic Canada along with its 24-vessel fleet harvesting 45 million pounds of products such as lobster, crab, scallops and clams.  The company exports about 95 per cent of its product to the US, Europe and Asia and has three sales offices in China as well as a wholesale operation in London, England.  The seven corporate licence holders of the offshore quota for the 24 vessels has divulged the estimated wharf value of $60 million annually.  Mr. Risley's 13.6 per cent shares and his supported shareholders control nearly 40 per cent of FPI might affect the approval decision of the regulatory bodies.

The merger will definitely create Canada's largest seafood company with a consolidated revenues of about $1 billion and $745 million in assets.  Mr. Risley will also become the CEO of FPI as indicated by the present CEO, Mr. Derrick Rowe.

        and        Clearwater Fine Foods Inc.

 

Scope

The project is limited to :
  • Involvement of the two companies presently in the global market
  • Roles and responsibilities imposed on the companies' decision markers
  • Distribution of products in the market nationally and internationally
  • Impact with the integration concerning employees, sales, market share and environment
  • Recommendation for future operation
  • Critical Assumptions

  • Team member identified will be available throughout the project
  • Statistical data can be obtained fairly easy especially with the private companies
  •  
  • Time Lines and Resources

  • 1-2 meetings to review the research objective and project structure;
  • 2 days to prepare a project objective and outline;
  • 2 weeks (1-2 meetings) for both companies background and their performance;
  • 1 day to summarize the background, scope and critical assumption;
  • 2 weeks (2-4 meetings) to research on the shares of the international market ;
  • 2 weeks (1 meeting) to tally the figures and statistics;
  • 3 weeks (2-3 meetings) to develop the assessment report, comments on impact and recommendation;
  • 1 week for report review and correction;
  • 3 days for complete study acceptance and final review.
  • Risks

  • Accuracy of the data
  • Unforeseen government rules and regulations with the merger
  • Design and Development Team Meetings

  • 2002-01-10, Research Project Kick-off
  • 2002-01-15, Project overview
  • 2002-01-23, Companies display and statistical data format
  • 2002-01-29, Paper structure and abstract
  • 2002-02-05, Past history and collected data
  • 2002-02-12, Data interpretation design
  • 2002-02-26, Charts review
  • 2002-03-14, Deliverables
  • 2002-03-26, Case Study Doc Review
  • 2002-05-16, Updated Doc Review
  • Documentation & Analytical Charts

    The main case study report contains the history and achievements of the two companies and follows by the market import and export analysis which will have an impact after the merger.
    Case Study Report (partially completed)

    The data has been obtained by various agencies such as Statistics Canada, Industrial Canada, Fisheries & Oceans of Canada and Clearwater.  The quantity is in Tonnes, product weight and value is in Thousand Canadian Dollars.  The revenue for Clearwater is based on the assumption of the 45 million pounds of product per annum harvest permit as reported in the company's backgrounder.
    The species in consideration are cod, clam, scallop, lobster, shrimp, crab and the rest of the species collection is classified as the others.

    The countries in consideration are USA, EU, non EU, Central & South America, Japan, Taiwan, Thailand and the rest of the countries collection is classified as the others.
     
    Analytical Charts Year 2000 Year 1999
    Export by Species  Exp2000S.htm  Exp1999S.htm
    Export by Countries  Exp2000C.htm  Exp1999C.htm
    Import by Species  Imp2000S.htm  Imp1999S.htm
    Import by Countries  Imp2000C.htm  Imp1999C.htm
    Export Import by Species  ExpImp2000S.htm  ExpImp1999S.htm
    Export Import by Countries  ExpImp2000C.htm  ExpImp1999C.htm
    Canada Export vs FPI & Clearwater   Exp2000FC.htm  Exp1999FC.htm
    Export by FPI
    Export by Clearwater

    Project Minutes

    2002-01-10 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Preliminary project encounter
  • Establish the project scope and plan
  • Discussion

  • The objective of the research.
  • Discussion of the requirement of the work term
  • Background research data availability and information
  • Next Meeting Agenda

  • Overview of the research
  • Approval of the research report status format and administrative procedure
  • Next meeting on 2002-01-15 in VNR 239 at 14:00 15:00

    2002-01-15 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Overview of the research and its requirement
  • Approval of the research report status format and administrative procedure
  • Discussion

  • The two companies' background and motivation
  • Discussion of the optional of the work term and establish the work tittle as research assistant
  • Approval of the project progress report format
  • The scope and major concerns
  • Next Meeting Agenda

  • Review of the companies' background
  • Next meeting on 2002-01-23 in VNR 239 at 14:00 15:00



    2002-01-23 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Overview of the research and its requirement
  • Approval of the research report status format and administrative procedure
  • Discussion

  • The companies' background and display format
  • Obtain statistical data from the previous project
  • Discuss the NOAA, International Trade, OECD import data
  • Next Meeting Agenda

  • Review of the companies' background write-up
  • Next meeting on 2002-01-29 in VNR 239 at 14:00 15:00

    2002-01-29 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Review the companies' background write-up
  • Paper table of contents
  • Discussion

  • The table of contents and abstract
  • Write-up on the historic events
  • Next Meeting Agenda

  • Review of the paper structure and its contents
  • Next meeting on 2002-02-05 in VNR 239 at 14:00 15:00


    2002-02-05 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Review the companies' background write-up
  • Review the collected data from the other student
  • Discussion

  • Correction on the abstract, Introduction
  • Data interpretation and presentation
  • Next Meeting Agenda

  • Review of the corrections
  • Next meeting on 2002-02-12 in VNR 239 at 14:00 15:00



    2002-02-12 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Data interpretation
  • Discussion

  • How do we display the data
  • Representation in sales, tonnage for each countries, species and the 2 companies
  • Next Meeting Agenda

  • Review the charts
  • Next meeting on 2002-02-26 in VNR 239 at 14:00 15:00


    2002-02-26 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Charts review
  • Discussion

  • Classification of charts by using 1999 and 2000 import and export data
  • Charts combine with quantity and value by species and by countries
  • Review the specific species and countries to be treated
  • Next Meeting Agenda

  • Review the charts correction
  • Next meeting on 2002-03-14 in VNR 239 at 14:00 15:00


    2002-03-14 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Deliverables
  • Discussion

  • Review the deliverables
  • The amendment of the FPI 15% Act
  • Next Meeting Agenda

  • Review the study report
  • Next meeting on 2002-03-26 in VNR 239 at 14:00 15:00



    2002-03-26 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Case Study Doc Review
  • Discussion

  • Some extra information about the merger highlights
  • Discussed about the domestic and global markets analysis
  • Discussed about the current risks and success factors of the merger
  • Next Meeting Agenda

  • Continue to review the study report
  • Next meeting on 2002-05-16 in VNR 239 at 13:00 14:00



    2002-05-16 in VNR 239 at 14:00-15:00

    Present: Daniel Lane and Arthur So
     

    Subject

  • Updated Doc Review
  • Discussion

  • Renewal of the case study contract
  • Corrected the Abstract and the Introduction
  • Next Meeting Agenda

  • Continue to review the updated study report
  • Next meeting on 2002-06-13 in VNR 239 at 13:00 14:00