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Who wants AquaChile's tilapia operation?

Maybe a new owner can finally make the business work.

It’s no secret that AquaChile’s adventure in tilapia farming hasn’t worked out. But could a new owner take the hobbling enterprise and give it fresh legs?

Agrosuper recently signed a deal to pay $850 million for AquaChile, but the group certainly wasn't thinking about the promise of tilapia when it decided to buy the business. Agrosuper's Los Fiordos, of course, is all about salmon, and salmon is where the money is.

Over the years, AquaChile put extraordinary effort and resources into its tilapia business, part of a visionary dream to take the US market by storm with a versatile fish that suits the American consumer’s palate.

That didn't work out. On an annual basis, AquaChile has lost money on every kilo of tilapia it has produced since 2012, and despite its best efforts to sell the operation, including to competitor Regal Springs, nobody has come forward.

In 2016, AquaChile decided to end its tilapia operations in Panama, which consisted of three concessions across 516 hectares in Lake Beyan.

Today, the business comprises a hatchery, farms and a tilapia processing plant in Costa Rica, but despite the well-known Rainforest brand and reportedly well-run operations, the company has been fighting a declining US market for the fish.

Once a driving force, the US market has turned cold to tilapia in general, largely because of negative media coverage often centered on frozen product from China.

Though AquaChile boosted Costa Rican fresh tilapia exports into the United States when it entered the market in 2007, demand has been unstable and has fallen every year since 2013.

The question now is, if and when the sale goes through, what will happen with Rainforest?

Tilapia in general has a good story behind it: a vegetarian species with an environmental footprint just behind that of salmon that meets the trend of a sustainable, healthy protein when farmed the right way.

But tilapia is not part of Agrosuper’s portfolio, and farming it involves high costs the protein giant might not want to absorb.

As of now, Agrosuper intends to buy 100 percent of AquaChile’s shares, but will it ever see a business option in the tiresome tilapia market?

Historically, Agrosuper has been a local business with all farming operations – poultry, beef, pork and salmon – in Chile. In addition, it is known to work on an aggressive business model that can farm large volumes, reduce costs and flex its muscle in price negotiations. But tilapia is a different game.

While some Chilean sources told me Agrosuper does not want the business -- and in fact that it is not part of the acquisition -- others said it may be forced to take it as part of the deal, which would leave them with a tough choice: invest in a money-losing operation, or look for a buyer willing to give it a go.

"It really depends on how well this is stated in the agreement," one source in the Chilean salmon sector told me.

Until the deal goes through, anything can happen, but in the meantime, AquaChile’s owners -- strong supporters of consolidation as a way to strengthen a sector -- continue to look out for opportunities that would put the business where they think it should be.

For the right price, it seems like an operation worth having. So who's in the market?

Comments? Email: lola.navarro@intrafish.com

Twitter: @IntraFishLola

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