Scottish Salmon Company bought by Faroese fish farm

By Douglas Fraser
Business and economy editor, Scotland

image source, Scottish Salmon Company
image captionAbout 600 people are employed by The Scottish Salmon Company in Scotland

The Scottish Salmon Company is being bought over by a firm in the Faroe Islands, for more than £500m.

Bakkafrost has agreed to take on 69% of the shareholding from the current majority owner, investment fund Northern Link.

That fund is reported to be backed by a Ukrainian investor.

The Faroese firm is issuing a mandatory offer for the remaining freely traded equity, forcing those shareholders to sell. The total cost is £517m.

The Scottish Salmon Company (SCC) is one of the three biggest producers of farmed salmon in Scottish waters, operating at 60 sites and with more than 600 workers.

The deal means the company will be de-listed from trading on the Oslo stock exchange, saving some costs at the Edinburgh headquarters.

The new owner expects there will be significant savings from supplying its own fish food to SSC farms.

It wants to use the advantages of joint marketing of its Faroese produce along with that of the Scottish Salmon Company, both of which command premium prices.

And it believes there will be advantages from the two parts of the business learning from each other, including methods for reducing the problem of sea lice.

Stronger, leaner fish

The Edinburgh firm, founded in 2009 and registered in Jersey, claims to have an advantage over its rivals through exclusive access to the genetics of the Native Hebridean Salmon.

It says this is stronger, leaner and firmer than the more commonly-farmed Atlantic salmon.

SCC had a harvest of nearly 30,000 tonnes last year, or 22% of total Scottish production. That was less than Mowi, formerly Marine Harvest, and just ahead of Scottish Seafarms.

SCC has had more than 18,000 tonnes harvested in the first half of this year, with capacity of up to 50,000 tonnes per year.

Nearly two-thirds of its output is exported, to 26 countries.

With revenue of more than £180m last year, earnings before interest and tax last year were £57m, and nearly £36m in the first half of this year.

Earlier this year, it set out a £10m investment programme for freshwater facilities, including a fish hatchery and smolt tanks at two sites near Applecross in Wester Ross. It also owns the Harris & Lewis Smokehouse.

Last April, SCC announced a strategic review, considering options of either returning capital to shareholders, or acquiring other assets to grow, or looking for a partner that could move it into wider markets, including Asia.

'Growth and profitability'

Bakkafrost had nearly 45,000 tonnes of salmon production last year, or 69% of the total in the Faroe Islands.

The joint production, between the Faroes and Scotland, should make it the fourth largest salmon producer in Europe.

Regin Jacobsen, who has been chief executive of Bakkafrost for the past 30 years, said: "Bakkafrost's journey has been characterised by delivering industry leading growth and profitability combined with a focus on shareholder value creation.

"The Scottish Salmon Company represents an attractive acquisition at this juncture providing exposure to the attractive and premium Scottish salmon farming region with potential for synergies and transfer of best practices."

Robert Brown, chairman of the SSC board, said the board is "pleased with the outcome" of the strategic review that led to the sale, "reflecting the value that has been created in recent years. We are proud of what we have achieved."

Craig Anderson, the chief executive, said the management team would work closely with the new owners of the business to understand its strategic vision and implications for all SSC's stakeholders.

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