Iceland Seafood International has signed a letter of intent (LoI) with stakeholders of Ahumados Dominguez to purchase an 80% stake in the salmon processing firm.

In the LoI, Iceland Seafood said that it would pay 8.8 times Ahumados Dominguez’s EBITDA on a debt and cash-free basis.

Last year, Ahumados Dominguez recorded $23.5m (€19.3m) in sales and $2.07m (€1.7m) in EBITDA and $1.4m (€1.2m) in profit before tax (PBT).

Iceland Seafood intends to make use of debt and equity to finance the acquisition.

However, the company said that the financing structure is yet to be finalised.

The remaining 20% stake will be held by Ahumados Dominguez managing director Pedro Mestanza, who has agreed to lead the company upon the completion of the deal.

As a retail-oriented company, Ahumados Dominguez has a presence in the Spanish smoked salmon segment.

In a statement, Iceland Seafood said: “The proposed acquisition will strengthen Iceland Seafood’s proposition in the Spanish retail market, as well as creating opportunities to utilise the platform Ahumados Dominguez has for selling high-quality cod products from Iceland.

“By leveraging both the untapped opportunities Ahumados Dominguez has as a standalone company, and the opportunities that a partnership with Iceland Seafood creates, the aim will be to significantly grow sales and profitability in the coming years.”

The two companies aim to complete the transaction before mid-July this year.

In August 2020, Iceland Seafood International signed a LoI with Mondi Group to acquire Irish seafood processing company Carrs & Sons Seafood for a $7.7m (€6.5m) consideration.