Norway-based Marine Harvest has been nominated by receivers to acquire the farming assets of Canada’s Gray Aqua Group for C$15 million (US$11.2 million) through a cash and debt free transaction.
Headquartered in New Brunswick on the East Coast of Canada, the strategic deal will broaden Marine Harvest’s geographic footprint beyond its presence along the West Coast of the country and will give the company proximity to the growing salmon market in North-East America.
Under the terms of the deal, Marine Harvest will acquire a hatchery in New Brunswick, a processing plant in Newfoundland, two farming licenses in New Brunswick and seven in Newfoundland. The company is also awaiting approval for 17 additional pending licenses in Newfoundland.
The company states that it is working to establish a production plan for the East Coast that will include a business with an annual capacity to produce between 15,000 and 20,000 tons of gutted weight salmon.
Global Span
One of the largest seafood companies in the world, Marine Harvest is the first aquaculture company to be listed on the New York Stock Exchange (NYSE). The company has operations that span 24 countries and supplies processed seafood to more than 70 global markets, according to its website. And in 2015 the company saw harvest volumes of salmon totaling 420,000 tons and posted turnover of NOK28 billion (US$3.2 billion).
Over the past two year the group has seen dynamic expansion across diverse global geographies and markets. In early 2015 the group announced its second deal in Chile within four months with the acquisition of a 43 percent stake in Chile’s leading producer, Aqua Chile, and a merging of Marine Harvest’s own business into the venture. The resulting company will have a production capacity of 260,000 tons of salmon and 25,000 tons of tilapia per year. The deal also gives Marine Harvest the option of increasing its stake in the venture to 55 percent between June 2016 and June 2017.
Then, after experiencing success with its first feed plant in Bjugn, Norway, which opened in 2014, Marine Harvest announced the investment of £80 in December 2015 for the construction of a greenfield feed factory in Scotland.
Construction of the facility is planned to begin in 2017 and is expected to be completed in the first half of 2018 when all existing external feed supply contracts in Scotland, Ireland, and the Faroe Islands are due to expire. The group expects the plant to have a production capacity of 170,000 tons of feed per year, with incorporated ability to expand capacity in the future. In addition, the company expects the facility to yield a capital return of approximately 15 percent.
More recently, in June of this year the company entered into a 50/50 joint venture with Cyprus-based Deep Sea Supply PLC for the purpose of building, owning and operating aquaculture shipping vessels.
Both Marine Harvest and Deep Sea Supply believe that there are significant cost efficiencies that are not being realized along the aquaculture supply chain. Marine Harvest plans to charter vessels as they are produced through the joint venture, which will serve as the company’s preferred provider, reducing the company’s operational costs.
“The aquaculture shipping industry is fragmented and characterized by lack of competition. Through the JV, Marine Harvest and Deep Sea Supply aim to consolidate the industry to achieve economies of scale,” expressed Marine Harvest in a company statement.
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Lynda Kiernan