Scottish Sea Farms buying Grieg Seafood's Shetland assets for GBP 164 million

Scottish Sea Farms has signed a share purchase agreement to acquire Grieg Seafood Hjaltland UK for GBP 164 million (USD 226.9 million, EUR 191.2 million).

Grieg Seafood Hjaltland UK consists of Grieg’s Shetland operations, which include a freshwater hatchery, 21 sea-water net-pen Atlantic salmon farms, and a processing facility that recorded 16,000 metric tons (MT) of head-on gutted production of Atlantic salmon in 2020.

The purchase is expected to close by Q4 2021, subject to approval from competition authorities and other closing conditions.

In a press release, Scottish Sea Farms – which is co-owned by Lerøy Seafood Group and SalMar – said the acquisition was a strategic move “to deliver optimal biological performance and help meet rising demand for premium quality, Scottish-grown salmon.”

Scottish Sea Farms CEO Jim Gallagher said the Hjaltland operations complement his company’s existing infrastructure, which produced around 24,000 MT of Atlantic salmon across mainland Scotland, Shetland, and Orkney.

“As farmers, we are constantly striving to create the best growing conditions for our salmon. The purchase of Grieg Seafood Hjaltland UK is a landmark step in our long-term strategy, giving us greater influence over several key biological factors including fish health, stocking regime, and sea lice management,” Gallagher said. “We’re very much looking forward to pairing the skill and know-how of our existing farming and fish health teams with the local expertise within Grieg Seafood Hjaltland UK, working as one to benefit fish welfare and boost survival. This, in turn, will ensure a more secure and stable supply of salmon for our discerning customers the world over, helping satisfy the insatiable demand for this highly nutritious, low carbon food.”

According to Lerøy Seafood, the transaction will be funded with external debt and new equity from the owners.

Separately, Grieg Seafood CEO Andreas Kvame said the sale was a result of an ongoing shift in strategy at the company to focus on its Norwegian and Canadian operations.

“The discontinuation of our salmon farming operations in Shetland is part of our communicated strategy, and the disposal represents an important milestone in Grieg Seafood’s strategy to concentrate future farming activities in Norway and Canada, where we see the largest potential for profitable growth,” Kvame said. “Towards 2025, Grieg Seafood ASA aims to grow production to 130,000 MT of annual harvest, reduce costs, and reposition the company in the value chain through downstream partnerships. All areas are based on sustainability, which is the company’s license to operate and integral to long-term value creation,” Kvame said. “Concentrating focus, resources and investments to the Norwegian and Canadian farming regions, as well as a strengthened balance sheet, will enable the company to better pursue opportunities for sustainable growth in these geographical areas and strengthen the execution of the 2025 strategy. Operational focus areas remain post-smolt, digitalization, and improved fish health and welfare.”

Kvame said he expected the company’s former Shetland assets to continue to perform well, following reforms made by Grieg in recent years.

“Following a three-year long period of restructuring and operational improvement, Shetland is now showing good performance with sea lice levels at an all-time low, increasing survival and a high superior share. I am pleased to say that we hand over operations in good shape,” he said. “I want to sincerely thank all employees of Grieg Seafood Shetland for their impressive efforts, especially during the difficult times of the pandemic. I am confident that the Shetland business will be in good hands and that salmon farming will continue to create value for the local communities in Shetland for years to come.”

Photo courtesy of Grieg Seafood