HALIFAX - Canada's largest shellfish and lobster producer Clearwater Seafoods (TSX:CLR) reported improved sales and profitability in the third quarter, factors the company says justify its refusal of a takeover bid by a privately held rival.
Halifax-based Clearwater said Tuesday its profit during the period rose to $5.1 million from a year-ago $4.3 million, while sales grew 6.5 per cent to $97.6 million -- a trend the company said it expects to continue in the next quarter.
Clearwater said its improving share price reflects the growth in its business, and its potential for more growth ahead reinforces its rejection of an offer by Cooke Aquaculture Inc. to buy the remaining units of Clearwater that it doesn't own for $3.50 each, valuing the income fund at about $97.1 million.
Third-quarter earnings and sales benefited from higher prices and a shift to higher-margin species, the company said, partially offset by lower volumes, higher harvesting costs and a stronger Canadian dollar.
"Management is encouraged by the third quarter and year to date 2011 results and the increasing global consumer and customer demand for our premium, wild, sustainably harvested seafood," chief executive Ian Smith said in a statement.
"Market demand for our products is strong across all major segments and we have every expectation that our earnings momentum will continue through the fourth quarter of 2011 and into 2012."
Clearwater Fine Foods Inc. (CFFI), which holds 48.2 per cent of voting rights of the company, has so far refused to sell any of its 4.6 per cent equity stake and has told the board that it does not believe the Cooke bid is a fair one.
Privately owned Cooke, led by CEO Glenn Cooke, primarily farms salmon. The company, which currently holds a 20.2 per cent stake in Clearwater and 10.9 per cent of voting rights of Clearwater Fine Foods, announced its hostile bid Aug 12. and Halifax-based Clearwater announced a shareholder rights plan three days later to fend off the takeover bid from the New Brunswick company.
The poison pill plan allows shareholders to acquire stock at an 80 per cent discount if Risley's company increases its stake or if someone else acquires ownership of at least 20 per cent of the fund's voting shares.
Cooke has said it welcomes the plan because it prevents insiders from buying more shares to block a potential bid.
Clearwater has 1,600 employees, about 20 vessels, seven plants and offices in Toronto, Europe, China, Japan, Europe and the United States.
