Billionaire Fredriksen’s Marine Harvest to Drive Fish Deals

Marine Harvest ASA, the salmon farmer controlled by billionaire John Fredriksen, will lead the way in consolidating the seafood industry as record fish prices make deals more attractive, DNB ASA and Nordea Bank AB said.

“We saw the fight for Cermaq that was not successful from the Marine Harvest side, so some of those market players are looking to do more,” Ottar Ertzeid, head of DNB Markets, said in an interview in Oslo on Dec. 16. “Within the seafood area there’s probably more consolidation to bid on.”

Marine Harvest, the world’s biggest salmon farmer, has in the past year sought to take advantage of a recovery in fish prices and an easing of restrictions on the ownership of farming capacity in Norway, the world’s largest salmon producer. Marine Harvest bought salmon processor Morpol ASA before it failed in a bid to buy Cermaq ASA, whose EWOS feed operation was eventually bought by Bain Capital LLC and Altor Equity Partners. The company has more recently acquired more than a quarter of Grieg Seafood ASA and signalled it may buy more.

“The tremendous interest in buying companies is driven by good profitability,” Kolbjoern Giskeoedegaard, an analyst at Nordea Markets, said by phone from Oslo on Dec. 17. “Those looking to get out of the industry are eyeing the possibility of selling at a good price, and those who are buying have a strong currency to pay with.”

Record Prices

Salmon prices have recovered from the worst slump since 2011, climbing 80 percent in the last three months to a record 51.4 kroner a kilogram (2.2 pounds) last week for fresh salmon weighing three to six kilograms, according to NOS Clearing ASA, a clearing house for financial contracts on the fish.

The global market for Atlantic salmon, which is also farmed in Chile, is estimated at almost 70 billion kroner ($11.5 billion), up from about 50 billion kroner last year, according to seafood research consultant Kontali Analyse.

The Oslo Seafood Index, which counts Marine Harvest, Cermaq, Grieg and Bakkafrost P/F among its 14 members, has gained almost 50 percent during the last 12 months. Marine Harvest fell as much as 0.7 percent to 7.05 kroner, and traded 0.2 percent lower as of 11:15 a.m. in Oslo. That curbs the stock’s gain to 38 percent since the start of the year and gives Marine Harvest a market value of 29 billion kroner.

An obstacle to Marine Harvest’s ambitions is that many fish farmers are controlled by a single larger owner, such as Grieg Holdings AS in Grieg and the Norwegian state in Cermaq, making it difficult to “raid” such companies, Giskeoedegaard said.

Chile Opportunities

Still, that’s unlikely to stop Marine Harvest making new attempts to buy those groups or others such as Norway Royal Salmon ASA or companies in Chile, the world’s second-largest salmon producer, he said.

Marine Harvest would consider increasing its stake in Grieg further if it was offered the chance, Chief Executive Officer Alf-Helge Aarskog said in an interview on Nov. 8. He declined at the time to say whether his company is actively seeking to buy more shares in Grieg.

While appetite for merger and acquisitions has been slow to recover after the 2008 financial crisis, investor demand is starting to improve, DNB’s Ertzeid said. “The financing possibilities for such activities are definitely better now with bank lending capacity and bank prices coming down,” he said.

Gathers Pace

Marine Harvest, in which Fredriksen’s Geveran Trading Co. owns a 31.3 percent stake, has “stated its vision to grow strategically within the Norwegian and Chilean farming industry,” spokeswoman Anne-Kristine Oeen said in an e-mailed response to questions yesterday. “Other than that Marine Harvest never comments on ongoing or potential opportunities.”

The company is seeking to buy assets in Chile as industry consolidation gathers pace and prices recover, Chief Financial Officer Ivan Vindheim said on April 4. The company is “continuously” assessing opportunities in the South American nation and will consider acquisitions if the price is right and it fits in with the company’s existing activities, he said.

“There have been a couple of transactions already and we think there’ll be more,” Vindheim said. “We have a stated ambition to participate in the consolidation we see in areas where we are already present, including Chile.”

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