Indre Harøy, Norway-headquartered land-based salmon farming company Salmon Evolution AS has acquired 100 percent of the shares in Kraft Laks AS, a family-owned smolt producer, for an agreed price of NOK 76.5 million (USD 8.6 million, EUR 7.3 million).
Located in Dalsfjorden, in Norway’s Volda municipality, Kraft Laks has been producing smolt since 1995. Today, it produces around 1.8 million smolt annually, but its license allows an output of up to five million, subject to certain conditions.
Over the last three financial years, the company has achieved annual average earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately NOK 10 million (USD 1.1 million, EUR 957,714) and annual average revenues of around NOK 28.5 million (USD 3.2 million, EUR 2.7 million).
In more recent years, most of its smolt has been sold on a long-term contract to a single major salmon farmer. Now though, the parties have identified significant expansion opportunities for the facility which, if realized, are expected to also cover Salmon Evolution’s smolt needs for at least the second phase of expansion at its Indre Harøy farm.
“The acquisition of Kraft Laks is the result of a thorough process where Salmon Evolution has evaluated a number of alternatives with respect to sourcing of smolt. The company is confident that acquiring an existing operation with documented track record has a significant risk-mitigating effect. It also gives us flexibility with regards to our production plan at Indre Harøy and finally it does so in a cost- and capex-effective manner,” Salmon Evolution COO Ingjarl Skarvøy said.
Salmon Evolution said Kraft Laks’s access to abundant fresh-water supplies – it has three inlet stations along two separate rivers – was a major attraction. Also, a royal resolution guarantees it a freshwater supply from the local power station at all times. The freshwater access has enabled Kraft Laks to utilize a similar production technology as Salmon Evolution’s hybrid flow-through system (HFS) with reuse of water, CO2 stripping, and oxygenation.
The purchase price includes NOK 16.6 million (USD 1.9 million, EUR 1.6 million) in the form of new Salmon Evolution shares issued at a subscription price of NOK 7.5775 (USD 0.85, EUR 0.73) per share, which equals the volume weighted average price the last 20 days prior to the transaction.
As a result, Salmon Evolution will issue 2,190,694 new shares to the previous Kraft Laks owners as sellers. These issue shares will be subject to a 12-month lock-up and will be issued pursuant to the board authorization granted by Salmon Evolution’s general meeting on 19 May, 2021. At the same time, NOK 35 million (USD 3.9 million, EUR 3.4 million) will be payable by Salmon Evolution in cash at closing and the remaining balance structured as a deferred cash payment. The cash element will be paid from existing available funds.
Kraft Laks Majority Owner and General Manager Knut Endre Heltne said that in Salmon Evolution, his company had found a partner that shares his company’s philosophy for salmon farming.
“For me, it is a great privilege to join the Salmon Evolution team as continued general manager of Kraft Laks, and for us as a family, we also look forward to take part in Salmon Evolution’s exciting journey as shareholders,” he said.
Kraft Laks is currently stocked with smolt to cover its existing customer contract, and the inventory is also aligned to cover Salmon Evolution’s expected smolt needs from and including the first smolt release at Indre Harøy, planned for March 2022, Heltne said.
Photo courtesy of Salmon Evolution
