Grieg Seafood takes the next step on its growth journey by acquiring Grieg Newfoundland

OSLO: Grieg Seafood ASA has signed Share Purchase Agreements (SPA) for the acquisition of Grieg Newfoundland AS in Newfoundland, Canada.

The Newfoundland project includes exclusivity for salmon farming in Placentia Bay, which has a farmable area bigger than the Faroe Islands. The project currently comprises licenses for 11 sea sites. The project also includes a high-end Recirculating Aquaculture System (RAS) facility under construction. he project has a long-term annual harvest potential of 30 000 – 45 000 tonnes Atlantic salmon.

Grieg Seafood has an ambitious strategy for long-term sustainable growth and development. By 2025, the company aims to harvest at least 150 000 tonnes of Atlantic salmon, to achieve cost leadership and to re-position itself in the value chain from a pure commodity supplier to a customer innovation partner.

Growth will be achieved through post-smolt investments, M&A activity and organic growth. Value chain repositioning will be achieved through increased presence in the market with partnerships, category development and brand cultivation. The acquisition of Grieg Newfoundland AS strongly underpins the 2025 strategy. The first harvest will be in 2022/23, and the region is expected to contribute 15 000 tonnes annual harvest by 2025.

Commenting on the acquisition, Grieg Seafood CEO, Andreas Kvame, says: “For the past few years, we have focused on utilizing our existing licenses with success. This year, we will reach our target of 100 000 tonnes. Now we are ready for the next step on our growth journey. By developing salmon farming operations in Newfoundland, using cutting-edge technologies at all stages of the production process, we are strengthening our position as a global leader in sustainable salmon farming.

The US market is the world’s largest and fastest growing market for Atlantic salmon, but only a third of US demand is currently met by North American production. We already have a position in this market through our operations in British Columbia, where we have attained significant sales and marketing experience. With close proximity to important markets on the East Coast of the US, this acquisition significantly strengthens our US market exposure and opens up for synergies with existing operations.”

Grieg Newfoundland AS is owned by Grieg Kapital AS (39%), Kvasshøgdi AS (39%), Ocean Choice International Ltd. (OCI) (19.5%) and Knut Skeidsvoll (2.5%).

Agreement to acquire 99% of the shares of Grieg Newfoundland AS and Grieg Seafood ASA has an option agreement to acquire the remaining 1% of the shares, which is retained by OCI.

Settlement for phase one of the production plan includes an up-front payment of NOK 620.5 million. NOK 264 million of this amount is for the work that Grieg NL has done in the project so far, including licenses with harvest capacity of 15 000 tonnes (NOK 17.6 per kilo). The remaining amount is related to investments already made in the project by Grieg Newfoundland AS.

When phase two is initiated, a further potential settlement of up to NOK 930 million is triggered by harvest volume milestones to be reached during the first 10 years of operation following the transaction.