Ice Fish Farm assumes ownership of Laxar, forming large salmon farmer in Iceland

Måsøval Eiendom, Skinney Þinganes, and Eggjahvita – collectively the majority shareholders at Ice Fish Farm and Laxar Fiskeldi – have agreed to vote in favor of combining the two Icelandic salmon producers by way of Ice Fish Farm assuming ownership of Laxar and its subsidiaries.

An Oslo Stock Exchange notice published by Ice Fish Farm on 13 December, 2021, said the purchase will be fulfilled by newly-issued shares in the company, subject to approval by the board of directors and shareholders. The parties agreed Ice Fish Farm will issue 37,525,424 new shares, increasing the total number of shares outstanding in the company to 91,525,424.

A previous stock exchange filing on 23 June announced that strategic discussions had taken place between the two companies.

Located in Reyðarfjörður on the east coast of Iceland, Laxar is a fully-integrated salmon farming company, with a total maximum allowed biomass (MAB) of 16,000 metric tons (MT).

With 4,007 MT of HOG salmon produced in 2019, and 4,846 MT in 2020, it is one of the largest salmon-farming companies in the country.

Through its fully-owned smolt facility Laxabraut, Laxar has its own production of smolt and post-smolt with an annual capacity of 2.5 million fish. It produced post-smolt with an average weight of around 400 grams in 2020. Laxar also has two fully-owned hatchery facilities and one-third ownership in the processing facility Bulandstindur, where Ice Fish Farm also has one-third ownership.

Ice Fish Farm CEO Guðmundur Gíslason said the two companies are already working together on harvesting and other parts of the value chain, as they operate in the same geographic area.

“The long-term goal is to create a company that delivers high-quality premium salmon with high efficiency and full respect to nature,” he said. “This starts with smolt. Both companies have huge capacity in producing large post-smolt to shorten farming time in sea. Second is fjords, sites, and licenses, where we now have full access of the areas and can join forces to plan and put up procedures that are going to deliver stable farming results, with emphasis on biological control, feeding, usage of sites, and usage of equipment.”

When it comes time to harvest, the merger will also help add efficiency, Gíslason said.

“With respect to harvesting, we have already gained synergies and will continue on building up more capacity to handle the increased volume that is coming. We have highly skilled people in both companies that will now put their minds together and make a plan for the future,” Gíslason said.

The combined company will hold all granted licenses on the east coast of Iceland, with a total MAB of 36,800 MT (34,500 MT of fertile licenses and 2,300 MT of sterile licenses).

All granted licenses are distributed over 15 sites in three different fjords; Berufjörður, Fáskrúðsfjörður, and Reyðarfjörður. In addition, Ice Fish Farm holds total applications of 17,000 MT in Stöðvafjörður and Seyðisfjörður, bringing potential production up to five fjords.

The combined production for 2021 is expected to exceed 15,000 MT HOG, of which some volumes, originally planned for 2022, have been accelerated to 2021 due to winter wounds on Ice Fish Farm production and Laxar's confirmation of infectious salmon anemia (ILA) at its Reyðarfjörður site.

Ice Fish Farm and Laxar also plan to integrate their routines for operations, planning, and biological control to realize synergies, which they said will result in increased production efficiency and utilization of licenses.

The new company will operate six smolt facilities, including three with post-smolt capabilities, and has a plan to become entirely self-sufficient in years to come with a yearly capacity of 10 million smolt.

Following the transaction, Måsøval Eiendom AS will hold 51,360,829 shares, corresponding to 56.1 percent of the company on a fully diluted basis. Skinney Þinganes hf and Eggjahvita ehf will hold 8,852,247 and 7,122,384 shares, corresponding to 9.7 percent and 7.8 percent, respectively.

The board of directors said it expects to enter a binding agreement by no later than the end of January 2022, the notice said, with the transaction's close expected by the end of the first quarter of 2022.

The Norwegian branch of Danske Bank acted as financial advisor to Ice Fish Farm. DNB Bank's DNB Markets acted as financial advisor to Laxar. Advokatfirmaet Thommessen AS is acting as legal advisor in connection with the combination.  

Photo courtesy of Ice Fish Farm