Russian firm Poronay has acquired its competitor Everon for an alleged price of USD 330 million (EUR 298.14 million), trying to capitalize on surging global prices for pollock, Kommersant has reported. With the prices of pollock steadily growing, and the trade of quotas being prohibited in Russia, more mergers and acquisitions are thought to come.
Poronay is a Yuzhno-Sakhalinsk-based fishery jointly owned by two companes: Dalnee and Ostrov Sakhalin. Dalnee is owned by Efim Malkin and Irina Panchenko – who are reportedly both linked to Russian business tycoon Roman Abramovich.
Ostrov Sakhalin is reportedly linked to Alexander Verkhovsky, former senator from the Sakhalin region and a major fishery player. Verkhovsky, who founded Gidrostroy – another group of Russian companies – also strengthened his market positions last year by purchasing another rival.
Ostrov Sakhalin’s share in Poronay is pledged by Dalnee, the Kommersant paper found, referring to a SPARK-Interfax database.
Everon was bought by Poronay from the Ekarma Group, jointly owned by Anatoly Kostin, Pavel Kostin, Alexander Gorshkov, and Konstantin Krupkin. Everon had a 22,000 metric ton (MT) quota a year for pollock, cod, and herring – according to the state fishery register – from Ekarma-Sakhalin, another company of the Ekarma group. Those quotas are secure till 2033.
Head of the Fishery Information Agency Alexander Saveliev evaluated that the price of the Everon’s quotas at USD 330 million (EUR 298.14 million), given the average price of USD 1,500 (EUR 1,355) per metric ton and the duration of the company’s quotas.
If this evaluation is right, the deal is the biggest since July 2018, when the aforementioned deal by Gidrostroy took place.
One year ealier, in March 2018, the Russian Fishery Company acquired the DMP-PM company which owned quotas for 60,000 MT of pollock.
Poronay has a right to fish up to 60,000 MT of pollock and herring a year, so the deal thus increased its whole volume to nearly 80,000 MT. Sergey Sennikov, the deputy director of international affairs and public relations for Norebo, in an interview with the Kommersant, weighed in that 80,000 MT puts Poronay into the top-10 of Russian fisheries.
Desptie that, it’s still far behind the leaders. Norebo possesses quotas for more than 400,000 MT, and the Russian Fishery Company has more than 300,000 MT.
The trend toward mergers and acquisitions in the Russian fishery industry is driven by the desire of the companies to gain access to more quota, as quotas themselves cannot be traded due to Russian legislation. In 2018, the Russian Fishery Agency for fisheries distributed quotas for much of commercial species in Russian waters for another 15 years based on historic principle. Given the fact that purchase and sale of quotas are forbidden by law, one can expect further deals in the industry.
This deal seems to be timed according to the increased value of pollock. According to the Russian Ministry of Agriculture, global prices for pollock went up by 37.1 percent, USD 1.68 (EUR 1.52) per MT, from September 2018 until September 2019. Russian export of pollock increased in the first nine months of 2019 by 12.6 percent to the corresponding period of 2018, to 655,600 MT.
The prices are set to rise further as population of pollock in Russian waters is going to decrease due to natural cycles.
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