Canada-based Cooke Inc. has reached an agreement with Seattle-based Ocean Beauty Seafoods to merge their Alaska salmon and groundfish operations.

Under the terms of the agreement, Cooke's Icicle Seafoods and Ocean Beauty Seafoods' wild salmon businesses, including sales and marketing, will be brought together under a new company, as will the two groups' Gulf of Alaska groundfish operations, OBI Seafoods Inc.

Icicle's five shoreside plants and Ocean Beauty's five shoreside plants will be included in the merger.

Ocean Beauty has processing facilities in Naknek, Alitak, Cordova, Excursion Inlet and Kodiak. Icicle operates salmon processing plants in Wood River, Egegik, Larsen Bay, Seward and Petersburg.

Mark Palmer, who serves as CEO of Ocean Beauty Seafoods, will serve as CEO of OBI Seafoods.

Ocean Beauty Seafoods' smoked salmon and distribution operations will remain under its current ownership under the name OBS Smoked & Distribution.

A consortium of private businessmen -- Howard Klein, Mike Selby and Ronald Shaw -- will continue to hold its 50 percent stake in Ocean Beauty Seafoods alongside the Bristol Bay Economic Development Corporation (BBEDC).

Though Cooke announced the agreement Friday, it remains unclear if the deal is finalized.

The parties have been in on-again, off-again discussions for the better part of two years.

The parties reached an agreement in principal on the deal earlier this month, sources told IntraFish, when the Bristol Bay Economic Development Corporation (BBEDC), which owns 50 percent of Ocean Beauty Seafoods, voted to approve the merger, the sources said.

Icicle Seafoods’ processing operations on the P/V Gordon Jensen and the permanently moored craft Northern Victor in Dutch Harbor are not included in the merger. These plants will continue to operate in the Bering Sea, Aleutian Islands, and Western Gulf of Alaska groundfish fisheries, and will operate under Icicle Seafoods, Inc.

John Woodruff, Chief Operating Officer of Icicle Seafoods, will become Executive Vice President of Alaska Operations for the new company.

Deal comes amid challenges in sector

Icicle has struggled in recent years, both under Cooke's ownership and under its prior owners, private equity group Paine & Partners.

For Cooke, the Ocean Beauty deal brings with it access to much-needed expertise in managing Alaska salmon processing operations.

The new group is formed during a period of deep uncertainty in the sector, which has struggled with overcapacity and fickle markets.

Maruha Nichiro's Peter Pan Seafoods is currently seeking new ownership, and while multiple companies have been pitched the assets, no buyer has been found. Other companies operating salmon processors in the state are also evaluating options for their assets, and seeing limited opportunities for exits.

The facilities under the new group will need significant investments to compete with the current dominant players, Trident Seafoods and Silver Bay Seafoods.

Though Icicle's Wood River facility in Dillingham, Alaska, has been upgraded, its other Bristol Bay facilities have not received significant investment in recent years.

With the exception of its Naknek plant, Ocean Beauty's facilities also have not received significant upgrades in recent years.

Ocean Beauty owns five Alaska plants. In addition to Naknek, it has processing facilities in Alitak, Cordova, Excursion Inlet and Kodiak. In addition to Wood River, Icicle operates salmon processing plants in Egegik, Larsen Bay, Seward and Petersburg. The company also owns processing vessel Gordon Jensen.

The deal comes in the shadow of the coronavirus pandemic, which will have an impact on the pending Alaska wild salmon season.