THE way has been cleared for a mega merger of salmon faming companies which could create a company capable of dominating the production of Atlantic salmon worldwide.
Nutreco Holding has agreed to sell its 75% shareholding in the aquaculture company Marine Harvest to the investment fund Geveran Trading Co Ltd for around £604m (881 million Euros).
Geveran Trading is part of Greenwich Holding Ltd, a company indirectly controlled by Norway's richest man, billionaire John Fredriksen. Geveran Trading will also buy the remaining 25% which is held by Stolt-Nielsen. The Greenwich Group also holds a controlling stake in the Norwegian aquaculture company Pan Fish and a 25% stake in Fjord Seafood.
The news has set off alarm bells in the Highlands and Islands, where such a merger would give the one company almost complete control of fish farming from Argyll to the North Highland coast and in the Western Isles. Pan Fish and Marine Harvest already own most of the fish farming sites on the west coast, and Marine Harvest and Fjord Seafood are the major players in the Western Isles. Nutreco's fish feed production company Skretting will not be part of the sale, although the fish feed supply contract with Marine Harvest will continue.
One industry insider who did not wish to be named said: "This is a terrifying prospect for the Scottish industry which has relied on diversification for its survival until now. This will give one company control of most of the mainland and the Western Isles. There are now just over 20 small independent companies left including smolt producers and it is questionable if the regulatory authorities will move in.
"When Marine Harvest bought Hydro Seafood, they were prevented from doing so in Scotland on the basis that this would give them too much control of feed and feed sales. The issue of salmon production was addressed on a global scale and did not influence the decision."
The transaction will be subject to the approval of regulatory and competition authorities. There were plans to sell the shares in Marine Harvest on the Oslo stock exchange in the next few weeks, but this has now been put on hold.
Wout Dekker, Nutreco's CEO said: "The sale of Marine Harvest to Geveran Trading is an important step for Nutreco. We have now finalised the first phase of our 'Rebalancing for Growth' strategy in an even earlier stage than foreseen. Nutreco's shareholders voted unanimously for the sale of all or at least 34% of Nutreco's shareholding in Marine Harvest. Now we will be able to sell all our shares in this company in a single transaction and unlock substantial shareholder value, as we promised. We will now put all focus on the second phase of our strategy: the growth of Nutreco's core activities in animal nutrition and fish feed. We are well placed to fulfil our growth ambitions."
Highland Council vice-convener Michael Foxley, said there was cruel irony in this latest move. "Norway would not have allowed the Scots to take over one of their strategic industries in the way we have allowed Norwegian companies to take over salmon farming. Numbers of jobs in salmon farming in remote areas have already dropped like a stone, with now a third of the workforce on farm sites and loch systems compared with eight years ago. If this merger goes through that will continue, processing facilities will be rationalised and there will be a tendency to even larger salmon farm production units with smaller crews and threats of disease outbreaks. This will be brought up as an emergency item on the Council's land and environment committee later this week. As jobs dwindle, the political and local support for the industry will drop. It is a huge disappointment that a good local resource has not been managed for the benefit of the people of the Highlands and Islands."
Nutreco built Marine Harvest into the world's largest salmon farming company. It bought Marine Harvest McConnell in 1999 and Hydro Seafood in 2000. In 2003 it closed its processing factory in Stornoway and moved processing to the mainland with the loss of 80 jobs. In September 2004 Nutreco and Stolt-Nielsen merged their fish farming activities and since then analysts have been predicting further mergers in the industry. After several years all three major players involved in the latest moves announced a return to profit in 2005, with Fjord Seafood reporting an operational profit of around £20m, Marine Harvest posted a profit of £82m, and Pan Fish has pre-tax profits of £8.3m.
Should fisheries be closed during breeding time to allow stocks to reach more sustainable levels?
