Billionaire John Fredriksen’s Marine Harvest rose the most since 2012 after agreeing to merge its Chilean salmon farms with the South American country’s largest locally owned producer.
Marine Harvest rose 5.9 per cent, the steepest advance since June 2012, to 110.2 kroner in Oslo. The world’s largest supplier of farmed Atlantic salmon agreed to buy a 42.8 per cent stake in Empresas AquaChile, whose shares surged as much as 33 per cent in Santiago before paring gains to 15 per cent.
The deal to combine the two companies’ operations under the AquaChile banner comes as Chile and Norway struggle to keep up with global demand growth driven by emerging markets, where more middle-class residents are seeking healthier diets.
“Our already strong position within salmon farming in Chile will be further strengthened,” Marine Harvest Chairman Ole-Eirik Leroey said in a statement today.
Victor Puchi will remain as chairman of the new AquaChile, which will continue trading on the Santiago stock exchange. The deal gives Marine Harvest an option from June 2016 to increase its AquaChile ownership to at least 55 percent via a public tender offer at a price that’s higher than $0.8856 per share and the market price at that time, according to the statement.
The combined company will have production capacity of about 260,000 metric tons of salmon in 2015, compared with 165,000 tons in 2014, Marine Harvest said.
Virus Outbreak
Marine Harvest said the combined group will be better prepared to improve fish health and the sustainability of the Chilean salmon industry, which was ravaged by an outbreak of infectious salmon anemia in 2007.
“It’s the first major purchase by Marine Harvest in ten years and is in line with its strategy to grow in Chile,” Kolbjorn Giskeodegard, analyst at Nordea, said by telephone Monday. “It also addresses the need for consolidation in Chile to solve the biological problems.”
Chile’s salmon output surged in the 1990s as Norwegian and local business groups discovered optimum conditions for farms in more than 1,000 miles (1,609 kilometers) of fjords and inlets. The government is restricting new licenses in the South American country until sanitation improves.
The industry consolidated in 2014 as producers bet on increasing global demand for fish protein. Marine Harvest increased its Chilean output buying Acuinova while Mitsubishi Corp. bought salmon producer Cermaq. AquaChile agreed to acquire Chile’s Invermar SA before withdrawing from the deal.
Marine Harvest failed in a bid to buy Cermaq in 2013.
Fish Harvest
The merger of AquaChile and Marine Harvest Chile is subject to due diligence and approvals from relevant competition authorities. LarrainVial is acting as financial adviser for Marine Harvest and Claro & Cia and Advokatfirma Wiersholm are legal advisers.
Marine Harvest reported it had operating earnings before interest and tax of 990 million kroner ($131 million) in the fourth quarter when its total fish harvest was 105,000 tons.
Bloomberg News edited by ESM
