Colabor Group Inc T.GCL

From Desjardins Securities

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Some info from Desjardins' analyst :

Colabor Group Inc. (GCL C$11.65, TSX)

Rating Hold–Average Risk Target C$11.50

Colabor agrees to acquire leading Québec importer and distributor of fish -- Keith Howlett [phone], [e-mail]

Impact: Positive

Colabor has agreed to acquire all of the outstanding shares of Les Pêcheries Norref Québec Inc., the leading importer and distributor of fresh fish and seafood products in the province of Québec and the Ottawa/Gatineau region. Norref’s annual revenues for the year ended July 31, 2010 were C$113m, representing approximately 10% of Colabor’s forecast 2011 revenues prior to the acquisition. Colabor stated that the acquisition will be accretive to 2011 EPS, and will “yield operational synergies”. We expect cost synergies to be overwhelmingly product procurement-related; revenue synergies may be substantial over time as Norref products are offered to Colabor’s customer base. The acquisition will be financed from existing credit facilities. No other financial details of the transaction have been disclosed. The deal is expected to close by the end of February.

Norref has major long-term contracts to supply fish to Sobeys (IGA) in Québec and to the Odessa chain of fish markets (which will continue to be operated by the family that is selling Norref to Colabor). The balance of Norref’s revenues are generated from a diverse customer base consisting of restaurants, hotels, grocery stores, caterers and fishmongers. The transaction meets management’s strategic objective of expanding Colabor’s “centre-of-the-plate” meal solutions for its foodservice customers. Management is very positive about the potential of the Norref acquisition. We had already incorporated C
.10 (untaxed) into our 2011 forecast with respect to anticipated acquisitions. This acquisition could be of that approximate significance, based on our preliminary estimate. Our expectation is that more acquisitions will follow.