Hilton Food Group, the Northern Ireland-based secondary meat processor, has confirmed reports it is in talks to acquire Icelandic Seachill, a UK-based seafood company that is contracted to supply salmon and whitefish to Tesco.

Hilton said it was in early talks to acquire Seachill, but that there was no certainty that any deal would be reached. With Hilton already heavily contracted to Tesco to supply beef, lamb and pork, the move to acquire Seachill makes sense.

With earnings (EBITDA) of more than £10m (€11.5m) in 2016, Seachill could potentially be valued as high as £80m (€89m) based on an eight-times multiple, which is typical for such a business. The company recorded sales of £266m (€295m) for 2016, meaning it operates an earnings margin of less than 4%.

For its 2016 financial year, Hilton Foods reported sales of £1.2bn (€1.3m) and operating profits of £34m (€38m). It has plenty of room on the balance sheet to buy Seachill, given that the company has no debt, operating with a net cash position of £32m (€36m) at year-end 2016.