Stock dilution puts SalMar in the driver’s seat in the battle for NRS

Aslak Berge

Billions at stake when rivals Helge Gåsø and Gustav Witzøe meet.

According to the latest shareholder update, Norwegian salmon farmer NTS directly or indirectly holds 16,198,233 NRS shares, which constitutes 37.18 per cent of the total share capital and voting rights in it’s competitor Norway Royal Salmon (NRS).

Based on this, things are looking quite bright for NTS’ strong man, Helge Gåsø, in the battle to take control of NRS.

The catch is the standard issuance mandate the NRS Board obtained at its AGM at the end of May. This gives the board the opportunity to print 4,357,219 new shares aimed at the bidder with the best offer.

Aslak Berge

This is what SalMar trusts in the bid of NOK 270 per NRS share.

And at the moment, it is SalMar that has the best offer. This indicates ten per cent NRS ownership for SalMar. And the ten percent new shares also mean a dilution of NTS ‘ownership position – from 37.18 per cent to 33.79 per cent. It gives NTS negative control, but not much more than that.

When Helge Gåsø and NTS, somewhat hesitantly, changed their minds from betting on a downsale to a takeover bid for NRS, Gåsø had to talk with the bank. It was to finance the bid of 209 kroner, a bid that was seen as bottom fishing by the vast majority of NRS ‘owners. Then it naturally became even more demanding to finance 240 kroner, as the new and improved offer was late on the evening of 11 August.

Helge Gåsø. Photo: The Frøy group

This means that NTS will sink into debt. And Helge Gåsø has a history of sky-high debt with an uncooperative bank. This is how his salmon farming company Midnor was taken over by the creditors in 2003, and later sold on the cheap to Lerøy.

On the other hand; if the banks say no, Gåsø has the option of checking out financing in the bond market. It can be expensive.

When SalMar signed up just before the stock exchange opened on Friday, with a bid 30 kroner higher than what was already on the table, the picture changed. For entrepreneur and CEO Gustav Witzøe does not need to negotiate with the bank to finance an acquisition. SalMar (and if necessary the holding company Kverva) has significantly larger muscles than NTS. The cash flow is also in a completely different league.

Northern Norwegian
While NTS is a central Norwegian company, NRS has its fish farms in northern Norway and in Iceland. SalMar has extensive activity in northern Norway – and in Iceland. The operational synergies are thus significantly greater than what NTS can offer. This also means that SalMar’s willingness to pay for NRS is much greater.

At the same time, it should be mentioned that Witzøe is still dissatisfied with having been bypassed when central mid-size fish farmer Salmonor was sold to NTS earlier this summer . On the whole, SalMar has been involved as a stakeholder in most major acquisition processes in Norwegian aquaculture over the past eight years. The Frøya company has also shown strong ability and willingness to grow through license purchases in recent years.

Gustav Witzøe. Photo. Ronny Teigås

More bids
The stock market expects more bids on NRS. Just before the Oslo Stock Exchange’s closing time on Friday, the NRS share is traded between NOK 276 and 277. One or more improved bids are discounted into this.

And Gustav Witzøe and SalMar are ready for that. It seems unlikely that SalMar will not increase if there is a competing bid.

The room for maneuver for Helge Gåsø is not as large. Then, of course, he has the opportunity to drop more bids. He can sit on, as one of two major owners in NRS. Or sell. The share block has a value of close to NOK 4.5 billion (US$497 million).


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