SalMar-NRS merger gets green light, merger makes even more sense now with new tax looming, say firms

The proposed shares buyout and eventual merger between SalMar and Norway Royal Salmon (NRS) have received the European Commission’s (EC) blessing, with both firms saying they are pushing ahead with the transactions because the resulting value to be created will put the merged company on a better footing as new taxes loom.

The two companies announced in March that SalMar was acquiring all outstanding shares in salmon farmer NTS, which owns SalmoNor and has a controlling 68-percent stake in NRS. And in May, NRS and SalMar have reached an agreement to merge the two companies, with SalMar as the acquiring company. 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.

Unconditional approval
The European Commission has approved both transactions. It declared SalMar’s acquisition of a majority of the shares in NTS as well as the merger as in accordance with EU Merger Regulations.

“By unconditionally clearing the transaction, both the Norwegian Competition Authority and the European Commission have confirmed that the transaction will not lead to any significant impediment of effective competition in the market for farming of Norwegian salmon,” said SalMar on Monday.

SalMar has committed to divest NRS’ ownership of 16,346,824 shares in Arctic Fish once the merger is completed. The shares represent approximately 51.28 percent of the shares and votes in Arctic Fish. It has reached a deal where Mow will acquire these shares for a price of NOK 115 per share, subject to customary closing conditions.

Merger is even more crucial now
SalMar acknowledged it has considered revising the offer terms because of the new tax put forward by the government. But in hindsight, it said the new tax has made the need for efficiency even greater because industry players are scaling back on their planned investments as a result of the new tax proposal.

The combination of the synergies of SalMar, NTS, NRS and SalmoNor, under the merged company, will lead to higher efficiency and strengthen the merged company’s position, it said.

“Despite an uncertain situation for SalMar, NTS and NRS caused by the new tax system proposed by the Norwegian government, the strategic and operational rationale for proceeding with the transaction remains, with strong backing from both owners,employees and the local communities where we operate.

“The combination will facilitate improved capacity utilization of the combined MAB and site portfolio, as well as the implementation of operational excellence, which in total are expected to provide even better biological results and lower production costs. Further, the parties have strong expertise within sales and distribution, and the combination will provide improved security for delivery of our products to customers worldwide,” it said.

“The combination will strengthen the activities in the regions where we operate. These are the core regions in an industry in which Norway is the world leader…We believe, in spite of a tax proposal creating uncertainty in this industry, that striving for continued sustainability, operational excellence, and efficient use of resources remains the best path to protect jobs and value creation in this rurally based production.”


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