Norway Royal Salmon, SalmoNor merger creates world’s sixth-largest salmon farmer

Norway Royal Salmon ASA (NRS) and its NRS Farming AS arm have entered into a share-purchase agreement for NRS Farming to acquire 100 percent of the shares in fellow salmon producer SalmoNor from Norwegian aquaculture group NTS ASA.

The transaction, which is conditional upon satisfactory due diligence, creates the world's sixth-largest salmon farmer, with the potential to produce around 100,000 metric tons (MT) salmon in Norway and 24,000 MT in Iceland.

In August 2021, NTS became the owner of more than 70 percent of NRS. The agreement follows a stock exchange notice released by NRS on 30 September, 2021, which stated that NTS’s board of directors had initiated a strategic dialogue on a potential combination of SalmoNor and NRS. At the same time, NRS CEO Charles Høstlund resigned from his position as CEO, with NRS COO Business Development Klaus Hatlebrekke stepping in as interim CEO.

"We are enthusiastic over a combination with SalmoNor,” Hatlebrekke said in a 11 January press release. “Through the merger we are now combining an impressing operational competence across the organizations, the most-important foundation for continued growth and development, and establishment of new jobs. We look forward to working together on developing a joint company going forward.”

The agreement gives SalmoNor an enterprise value of NOK 8.3 billion (USD 940.2 million, EUR 829.6 million), while the estimated equity value of SalmoNor at the time of closing was estimated at around NOK 6.35 billion (USD 719.4 million, EUR 634.7 million).

“This transaction combines two leading salmon farmers with licenses in some of the best regions in Norway and creates a company of considerable size, that will be in the forefront when the future of salmon farming will be formed, enabling further growth and development in the central and north of Norway,” NRS Independent Board Member Trude Olafsen said. “The purchase of SalmoNor provides access to a very competent operational organization that will strengthen NRS' own organic growth opportunities and strategies going forward.”

SalmoNor is a fully integrated salmon farming company with a license portfolio in production area 7 in Central Norway, and with an estimated harvest volume of 36,500 MT head-on-gutted weight (HOG) salmon in 2022 and 39,000 MT in 2023. NRS has 36,085 MT of maximum allowed biomass (MAB) for salmon farming in Norway’s Troms and Finnmark regions, and 17,800 MT MAB for salmon farming and 5,300 MT MAB for trout farming in Iceland through Arctic Fish. It also holds a minority interest in two associated Norwegian fish-farming companies which together own nine fish farming licenses.

“The management in SalmoNor and NRS see a clear strategic rationale in combining best practice from both companies to improve the performance and profitability within smolt, grow-out, development licenses and sales,” SalmoNor said in a release.

NRS said the purchase price will be financed through 68.14 percent consideration shares in NRS and 31.86 percent cash, with the cash consideration expected to be fully or partially financed through an external private placement in NRS.

In a new notice, NRS said NTS representatives in the board of directors in NRS had declared themselves disqualified and did not participate in the evaluation of the transaction.

An independent investment bank is engaged by the independent board in NRS to present a fairness opinion on the value of SalmoNor in the transaction. NRS said it expects to publish the outcome of this fairness opinion on 13 January.

DNB Markets is acting as financial advisor to NRS, and Wiersholm is acting as legal advisor to NRS.

Photo courtesy of SalmoNor