Fish entrepreneur gets $167m for Morpol stake

Marine Harvest, the world's biggest salmon producer, boosted a drive to become a feed-to-table fish giant by buying 48.5% of smoked salmon group Morpol, and unveiling plans to buy up the rest of the shares.

The Norwegian group paid NOK938m ($167m) for the initial stake, bought from Jerzy Malek, who founded Morpol 16 years ago, since when it has grown into a salmon products group present in 39 countries, and employing 3,500 people.

This deal, which Marine Harvest will pay in a mixture of cash and shares, equates to a Morpol stock price of NOK11.50, a premium of 39% to the closing price in Oslo on Friday.

And Marine Harvest is to submit an offer for the rest of Morpol stockholders to sell out at the same price, which values Morpol's total equity at NOK1.93bn ($344m).

'Giant leap'

The acquisition "in line with Marine Harvest's strategy of forming a world-leading integrated protein group", Ole-Eirik Leroy, the Marine Harvest chairman, said.

While Morpol has some salmon farming activities, to add to the Marine Harvest production empire, these represent a relatively small part of the group, and in the July-to-September quarter contributed only about E500,000 out of group operating profits of E4.6m.

The bulk of Morpol's operations are in markets such as smoked salmon and gravadlax, meaning that Marine Harvest's "presence within value-added processing activities will take a giant leap through this transaction", Mr Leroy said.

With Marine Harvest in October unveiling an NOK800m ($140m) investment in feed production, in an effort to curtail costs, the group has gained "a great starting point to become a unique integrated protein provider.

"The board believes that such strategy will provide significant operational benefits, as well as boosting and stabilising the long-term earnings power of the group."

Auction process

Marine Harvest is seeking to diversify throughout the salmon production chain in an effort to avoid the volatility of commodity salmon markets, with low fish prices behind an 84% slump in third-quarter earnings.

Mr Malek "has been a pioneer within the value added processing segment in Europe", doing an "impressive job with developing the smoked salmon segment", Marine Harvest said.

Morpol, which Mr Malek founded in Poland, said it had been informed in September of his desire to sell up, "and made information available for potential buyers in order to secure the interests of all shareholders".

The Morpol board "will in due time revert with a fairness opinion and a statement" over the offer from Marine Harvest, which said it also expected to have to make a filing to European Union competition authorities.

Marine Harvest shares closed up 0.4% at NOK5.08 in Oslo.

Morpol shares soared 37% to NOK11.35, close to the value of the bid.

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