The fight for the future of Omega Protein has intensified with investors accusing the company’s management of changing the fishmeal and fish oil maker’s bylaws to prevent a sale that they say would be in shareholders’ interest.
At issue is a series of changes to its bylaws that Omega’s board of directors enacted on November 5, according to records on file at the Securities and Exchange Commission (SEC). These changes are largely technical but amount to “a thinly veiled attempt to entrench the company’s board and management” and “diminish” the board’s accountability to shareholders, according to Nelson Obus, managing member of Wynnefield Capital Management, which owns 7.8% of Omega’s stock.
Wynnefield blieves that Omega’s management has taken the company too far from its roots as a menhaden catcher-processor and into the human nutrition supplements business, which Obus once called “di-worsification\".
Omega CEO Bret Scholtes has said that expanding Omega’s reach into the human nutrition business, which it achieved largely through the $70.5 million acquisition of plant and marine based specialty oils producer BioOriginal Food & Science Corp in 2014, has a bright future. This is partly due to prevention playing a larger role in keeping US health care costs, which creates opportunities for Omega’s fish oil and other supplements.
Obus, citing the recent purchase of Louisiana menhaden and fishmeal operation Daybrook Fisheries by South Africa’s Oceana Group, has said the timing for a deal is right. In September, Omega announced that it had hired the investment bank J. P. Morgan to review strategic options for the company, including a sale. He has threatened to attempt to remove Omega’s current board of directors if selling the company isn’t made a priority soon.
The price of Omega’s shares has risen considerably in recent months, due mainly to soaring fishmeal and fish oil sales during Q3 2015. On November 4, the company’s share price was $17.68 but jumped following the earnings report, hitting a high of $25.03 on Nov. 23. It has since retreated to $21.67 as of December 11.
To the end of September 2015, Omega had caught 465,287 metric tons of menhaden, compared to 345,455 metric tons in the first nine months of 2014. This year looks set to see the highest landings since 2012, when the company caught 512,474 metric tons to September.
Source: Jason Smith, Undercurrent News. (8 free articles per month.)
