February 24, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Norway’s Mowi ASA, the largest salmon farmer and producer of Atlantic salmon in the world, has made an offer of 13.8 billion kroner (US$1.55 billion) to acquire rival NTS ASA. 

Mowi alone meets 20 percent of the global demand for farm-raised Atlantic salmon. The company has 12,000 employees, and has operations in 25 countries with control over its own genetics, feed, farming operations, harvesting, processing, logistics, sales, and marketing of its products.

The fourth quarter of 2021 marked the end of a record year for the company, which saw harvest volumes of 466,000 tons, and sales of 248,000 tons of value-added products, tripling its earnings with an operational EBIT of EUR146 million (US$163 million) in the last quarter. 

Mowi noted how it had been tracking NTS Group for years as it grew into one of the leading fully integrated producers of Atlantic salmon in Norway and Iceland, producing 84,000 GWT (gutted weight tons), and holding 7.7 development licenses in Arctic Offshore Farming as well as control of aqua service company Frøy ASA.

Mowi’s offer for NTS is in the form of a combined cash and stock deal at 110 kroner per share to be settled half in cash and half in Mowi shares, representing an 18.3 percent premium to the close price of NTS as of January 14, 2022 – the last trading day prior to the offer being made.

From the Beginning

In 1959, Norwegian brothers Karsten and Olav Vik were inspired by Danish freshwater fish farms to try farming rainbow trout in floating wooden crates, realizing that the trout could be slowly acclimated to thrive in seawater. 

By 1962, professor Harald Skjervold with the Norwegian Agricultural University was given permission to establish the country’s first salmon breeding program by catching salmon for breeding from 41 different rivers. And together, with professor Trygve Gjedrem, started Norway on the path of being known for having the best salmon and trout breeding stock.

Large-scale salmon farming began in Norway on the island of Hitra in 1970, when brothers Ove and Sivert Grøntvedt set 20,000 salmon smolt in octagonal cages. From these beginnings, Norway’s salmon farming industry has grown to be a key industry for the country, which has set in place stringent guidelines and monitoring protocols, restricting the number of farms to 750 for each 18,000 miles of coastline as it continues to develop. 

Notwithstanding global pandemic conditions beyond our control, today, salmon farming brings great potential for growth. Since 1980, global consumption of salmon has more than tripled as demand for protein also climbs. And as wild stocks grow more depleted, salmon farming is stepping in to bridge the gap between market demand and production, with expectations that the market volume will grow at a CAGR of 3.9 percent between 2019-2024 to reach 4.7 million tons.

Consolidation 

Mowi has become a giant in its industry. Today, the company has had its own breeding and genetics department through which it produces its own eggs in order to ensure specific genetic properties. It also holds its own brood stock, produces its own feed, has its own vets, geneticists, researchers, and farmers, and offers customers complete transparency of its supply chain and the ability to trace products from the plate back to the farm.  

Mowi’s move to acquire NTS occurred amid upheaval at the targeted company over its future after it acquired a majority stake (68 percent) in Norway Royal Salmon ASA and organized a merger with its own SalmoNor AS unit. A breakoff group of NTS shareholders offered to acquire the rest of the shareholders at 105 kroner per share, but Mowi came in at 110 kroner. 

“NTS’ geographical footprint and competent organization fit unusually well with Mowi’s current operations and strategy,” said Ivan Vindheim, CEO, Mowi. Together, we can maintain and create new jobs and further develop competence clusters along the Norwegian coastline, for the benefit of local communities.”

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– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.