Global shipping giant Stolt Nielsen's decision to separately list its land-based aquaculture business Stolt Sea Farm last year was made after seeing the market valuation of land-based salmon farmer Atlantic Sapphire.
The Oslo Stock Exchange-listed company announced plans to separate its turbot and sole production in January 2020 and list it separately after 30 years as a subsidiary.
“Atlantic Sapphire received a higher market valuation than Stolt Nielsen," CEO Niels G. Stolt-Nielsen told IntraFish sister publication Dagens Naeringsliv.
"Jesus, we've been doing land-based farming for 30 years and recycling technology for 20 years, and we were generating a significant positive EBITDA (earnings before interest, taxes, depreciation, and amortization). If the market was willing to price Atlantic Sapphire at that price, it was my duty to the shareholders to list the division."
In September 2019, Atlantic Sapphire was ranked the world's 15th most valuable stock listed salmon company in IntraFish's World's Largest Seafood Companies, with a market capitalization of $771 million (€700 million), more valuable than established salmon farmers Multiexport, Blumar, Invermar, Tassal, New Zealand King Salmon, The Scottish Salmon Company and Salmones Camanchaca as well as global seafood giants like High Liner, Clearwater, Brim, Frosta and Sanford.
On paper, the value of the company continued to increase, despite the fact it has produced very little seafood.
The secret to Atlantic Sapphire's success, however, remains elusive to Stolt Sea Farm, who found a less excitable reception to its listing, with the market lacking the enthusiasm to pay the $250 million-$300 million (€220 million-€265 million) valuation the company was aiming for.
The reaction prompted Stolt Nielsen to drop the proposed listing in October, with no plans for it to separate or list in the near future.
"The business is a growth area; it finances itself with the cash flow it generates. It is not necessary to list it," said Stolt-Nielsen.
"If we separate the company and list it, the value will increase. But that’s not what I'm interested in. I'm interested in cash flow and dividends to our shareholders, and consider acquisitions if such possibilities emerge."
The group produces turbot and sole at 14 plants in Europe, primarily in Spain.
'It was a mistake to sell the salmon farming division'
Stolt Nielsen also used to be a key player in the salmon farming industry, a business CEO Stolt-Nielsen regrets bowing out of, he told Dagens Naeringsliv.
The company began producing salmon in the late 1980s in the United States, Canada and Norway through the acquisition of several farms, continuing its investments into the '90s when it made acquisitions in Chile and began production in Scotland.
In 2004, the company agreed to merge most of its marine aquaculture production -- including cod, sturgeon, halibut, salmon tilapia and sea trout -- with animal nutrition giant (and then aquaculture producer) Nutreco Holding.
The move lead to the creation of the world’s biggest aquaculture company, Marine Harvest, in which Stolt held a 25 percent stake.
In 2006, however, both Stolt and Nutreco sold their stakes in Marine Harvest to investment fund Geveran Trading for €1.18 billion ($1.3 billion). Stolt gained around $80 million (€70.7 million) from the sale and set about with renewed focus on its land-based turbot and sole operations, where it saw the strongest growth prospects.
Geveran Trading, meanwhile, indirectly controlled by Norwegian shipping magnate John Fredriksen, also held significant stakes in Norwegian aquaculture companies Pan Fish and Fjord Seafood, and they were merged into what now constitutes salmon farming giant Mowi, today worth more than NOK 100 billion (€10 billion/$11 billion).
“I am willing to confess that it was a mistake to sell the salmon farming division,” said Stolt-Nielsen.
“We had been doing salmon since 1972 and it was a very cyclical industry. It is quite clear that we should not have sold but you cannot look back. You have to look ahead."
