Norway Royal Salmon to merge with SalMar

Norway Royal Salmon (NRS) and SalMar have reached an agreement to merge the two companies, with SalMar as the acquiring company.

The parties have negotiated a proposal for an exchange ratio of 0.369 shares in SalMar per share in NRS. Based on SalMar’s volume, weighted average closing price on the Oslo Stock Exchange from 4 April to 20 May, this amounted to a value of NOK 265.18 per share in NRS, corresponding to a premium of 6.3 percent compared to the closing price on 27 May and 12.1 percent in relation to NRS average closing price over the last 30 days.

NRS and SalMar outlined the details in a stock exchange announcements on Monday morning.

The purpose of the merger is to increase value creation in the regions in which the companies operate, as well as make it possible to realise synergies between the companies. The merger is conditional on NRS’s takeover of SalmoNor being carried out immediately prior to the completion of the merger, and that all conditions for the implementation of SalMar’s voluntary offer for the shares in NTS have been fulfilled or terminated, or the voluntary offer has been completed.

The parties have several overlapping industrial activities, both in Norway, the West Fjords in Iceland and offshore aquaculture. A merger of the parties will make it possible to realise major synergies:

  • The merger will facilitate better capacity utilszation of the combined MAB (maximum allowed biomass) and production site portfolio, as well as improved operations and cost structure.
  • NRS’s new smolt plant in Dåfjord outside Tromsø and SalMar’s development of the Senja 2 and Tjuin plants, together with the parties’ existing smolt capacity, will be valuable resources to ensure the delivery of the right smolt at the right time and facilitate improved biological performance throughout the value chain.
  • SalMar’s new processing plant at Senja, InnovaNor, will secure significant additional volumes through the merger. This will provide economies of scale through improved capacity utilisation and logistics, as well as a reduction in biological risk.
  • SalmoNor has companies throughout the value chain and has delivered solid results over many years. SalmoNor is located in Rørvik, which is located in production area 7, and will therefore complement SalMar’s operations in Central Norway.
  • The parties also have great expertise in sales and logistics, and the merger will provide improved access to customers worldwide.
  • Both SalMar and NRS have made significant investments in offshore-related farming technology, which offers great synergy potential. Together, the parties will be a strong force in the further development and realisation of offshore aquaculture.
  • Both operate in the Westfjords of Iceland through Icelandic Salmon (controlled by SalMar) and Arctic Fish (controlled by NRS). Together, the parties can realise major synergies through, for example, streamlined operations at sea and optimal structure in the value chain on land, including smolts, processing and sales.
  • A merger will strengthen competence and capacity, and pave the way for further sustainable growth for the parties. The companies have a strong corporate culture, and the expected significant production growth they are facing will strengthen the company’s attractiveness as an employer with a need for competent, district-based labor.
  • The merger can strengthen the overall financial position, through increased sales and achievable cost synergies.

“A merger of NRS and SalMar has solid industrial roots, at the same time as it is a good solution for the shareholders in NRS. Through the merger, they will be settled in a liquid share, with prospects for significant synergies and good dividend potential, where the valuation of NRS in the merger is at a historically high level,” Paal E. Johnsen, Chairman of the Board of NRS, said in a statement.

“A merger between SalMar and NRS makes sense. We are now merging strong teams that constitute the best aquaculture expertise in Norway. The merger also enables us to extract synergies better and faster than by implementing SalMar’s voluntary offer to acquire all shares in NTS,” Leif Inge Nordhammer, chairman of the board of SalMar, added.

The transaction will be completed in two consecutive steps.

First, NRS will immediately prior to the implementation of the Section carry out the agreed transfer of SalmoNor from NTS against settlement in cash and shares in line with a previously entered into agreement with associated supplementary agreements. The share price for the NRS shares used in this settlement is set corresponding to the value set for the NRS shares in the Merger. The cash portion of the SalmoNor transaction will be paid by issuing a promissory note that will be settled after the merger between SalMar and NRS has been completed. Additional agreements have been entered into between NTS and NRS / NRS Farming in connection with the SalmoNor transaction that regulate this. This means that the board of NRS has decided to propose to the general meeting of NRS that the following capital increase be implemented:

  • The share capital in NRS is increased by issuing 15,360,452 new shares, at a subscription price of NOK 265.18 per share, and the total subscription amount is NOK 4,073,284,661 (€401 million).
  • As a deposit for the shares, NTS will transfer to NRS a receivable of NRS Farming with a nominal value of NOK 4,073,284,661 (€401 million) that arises in connection with the completion of the SalmoNor transaction. The new shares will be issued in full to NTS.
  • The capital increase will be carried out on the same day as the SalmoNor transaction is carried out and just prior to the completion of the Merger between SalMar and NRS. Implementation of the capital increase presupposes that NRS and SalMar have declared that all the conditions for the implementation of the Merger have been met and that this will be implemented immediately after the issue.

Immediately thereafter, NRS will merge with SalMar, where both existing shareholders in NRS and the shareholder who have received recently issued shares in the SalmoNor acquisition will receive shares in SalMar plus a cash share, in line with the agreed merger plan.

    • The merger will take place via a merger where SalMar will take over NRS in accordance with the rules for mergers in the Public Limited Liability Companies Act.
    • The NRS shareholders will receive 0.303933 shares in SalMar and NOK 52.84 (€5.2) in cash per NRS share, which results in the NRS shareholders having a total ownership interest in SalMar of 12.3 percent upon completion of the Merger and the NTS offer.
    • If SalMar’s previously announced dividend of NOK 20 per SalMar share is not adopted with an ownership register date set prior to the completion of the Merger, the shareholders will instead receive 0.295475 shares in SalMar for each NRS share. The cash consideration will remain unchanged.
    • Fractional shares will not be allotted, and for each shareholder the shares will be rounded down to the nearest whole number. In cases where there are shares left over after rounding, these will not be allotted, but issued to and sold by Arctic Securities and the sale price distributed proportionally between those who should have had fractional shares.
    • The completion of the merger is subject to the approval of shareholders at both SalMar and NRS at extraordinary general meetings which are expected to be held around 30 June 2022.
    • Witzøe-controlled Kverva Industrier, which owns 50.88 percent of the shares in SalMar, LIN, which owns 1.10 percent of the shares in SalMar, and NTS, which owns 68.14 percent of the shares in NRS, have committed to attend the respective general meetings. and vote for the merger.
    • In addition to the approval of the respective general meetings, the completion of the merger is also conditional on:
      • (i) SalMar has announced that all conditions for the implementation of the NTS offer, as regulated in the offer document from SalMar dated 17 March, have been met or waived (or that the NTS offer has been completed);
      • (ii) NTS has transferred all shares in the subsidiary SalmoNor to NRS and NRS has issued and delivered 15,360,452 new shares in NRS to NTS as part of the consideration for SalmoNor;
      • (iii) all necessary approvals for the merger from competition authorities and other relevant authorities have been granted unconditionally or on terms that will not have a material adverse effect on the business of the merged entity or substantially alter the basis of the terms of the merger.

Subject to the merger being approved by the respective general meetings, it is expected that the merger will be completed during the third quarter of 2022.

SalMar has a number of available sources of financing that do not affect SalMar’s dividend capacity and investments in the value chain, including, but not limited to, available cash and debt capacity based on SalMar’s sound financial position.


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