AKVA moving forward with Egersund Net acquisition

Published on
May 16, 2018

Norway-based AKVA group signed a letter of intent on 15 May regarding the enterprise’s pending acquisition of all shares of Egersund Net, an equipment producer for the aquaculture industry. 

The transaction will see AKVA paying NOK 750 million (USD 92.9 million, EUR 78 million), the enterprise value of Egersund Net, to acquire the equipment developer. However, the final purchase price may be adjusted to accommodate the net debt and working capital of Egersund Net at completion, AKVA said in a press release. 

The pro-forma revenues for Egersund Net are estimated based on numbers reported by the company: NOK 586 million (USD 72 million, EUR 61 million) and NOK 603 million (USD 74 million, EUR 63 million) for 2016 and 2017, respectively. Meanwhile, pro-forma adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for Egersund Net for 2016 and 2017 yeilded preliminarily estimates of NOK 88 million (USD 10.8 million, EUR 9.2 million) and NOK 76 million (USD 9.3 million, EUR 7.9 million), respectively. 

AKVA’s revenue and EBITDA in 2016 were reported as NOK 1.6 billion (USD 197 million, EUR 167 million) and NOK 144.2 million (USD 17 million, EUR 15 million). In 2017, the group’s revenue and EBITDA were recorded as NOK 2.1 billion (USD 259 million, EUR 219 million) and NOK 240 million (USD 29.6 million, EUR 25 million).

The relationship between AKVA and Egersund Net has intensified over time, with the former announcing it would promote Egersund’s products outside of Norway via export market channels. Egersund complements AKVA's product and service offerings “by adding nets and moorings to the portfolio,” AKVA explained in its release.

The acquisition will help to expand the reach and capacities of both parties, AKVA explained.

“AKVA will be able to serve its customers more efficiently and develop the most optimal solutions for the complete life cycle of fish farming as a more complete technology and service supplier with strengthened geographical presence. Furthermore, Egersund Net's technology, products and expertize will be given access to a wider geographical area through AKVA's global presence and distribution channels,” AKVA said. 

“The combined force within technology and development will accelerate the work towards delivering efficient and cost-effective solutions for the aquaculture industry, ensuring both optimal fish welfare and the highest levels of productivity,” the company added. 

Hallvard Muri, AKVA group’s CEO, is enthusiastic about what merging with Egersund Group will mean for customer engagement efficiency across the board. 

"We are extremely satisfied with this opportunity and are looking forward to working with Egersund Group AS to realize the transaction,” Muri said. “During the last few years, we have seen the competition within cage-based solutions getting increasingly tougher. Our customers are expecting nothing but the best, and by joining forces we will have the best basis for strengthening our combined value proposition which will make our customer interactions and interfaces more efficient. This will also enable us to accelerate the development work to optimize our total cage, net and mooring solutions. AKVA group expect significant sales synergies from the acquisition but it will require investments and continued commitment, and before that, making the transaction a reality will be top priority."

Ultimately, the merger will see two individually strong companies form a formidable unified front for the betterment of the aquaculture industry at large, according to Hans Kristian Mong, AKVA’s chairman and 50-percent owner of Egersund Group.

"We have strong belief in Egersund Net and in AKVA group on a stand-alone basis, but even stronger belief in them together,” Mong said. “To participate in the value creation from this acquisition, taking a high proportion of the settlement in shares, is a prerequisite. Assuming we will reach a final agreement, we will own approximately 62 percent of AKVA group. We still have a long term goal to be a majority owner in AKVA."

"The board is pleased to have made this move in the direction of building a larger, stronger and more geographically diverse company," concurred Anne Breiby, the acting chairman in the transaction. 

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