Norwegian salmon farming giant Norway Royal Salmon reached a deal to carve out and sell off subsidiary Sør Farming to three salmon farming companies.
Norway Royal Salmon reached a deal with Tombre Fiskeanlegg, Lingalaks and Eidesvik Laks regarding the sale of all shares in Sør Farming for a purchase price of NOK 1.2 billion (€121 million/$132 million).
As part of the deal, Norway Royal Salmon entered a long-term cooperation deal for the purchase and sale of the fish harvested in the region. Sør Farming's total maximum allowable biomass is 4,680 metric tons.
The company hired DnB markets as an adviser in May to look at "strategic alternatives" for the region, formerly called NRS Feoy. NRS CEO Charles Hostlund told IntraFish the company was open to a sale, joint venture or "other forms of cooperation" for the division.
Several bidder reportedly expressed interest in the operations, sources told IntraFish.
The Sør Farming operation, which holds six licenses, has under-performed for the company. In the first quarter, the operation was a key reason for a 12 percent slump in earnings.
Through the first half, according to an IntraFish analysis of salmon farming companies' EBIT/kg margins, Norway Royal's southern division turned in the second-poorest performance, €0.31 ($0.34) per kilo, down 84 percent from the year prior.
Hostlund said the Sør Farming sale will allow the group to invest and focus on its Iceland and Northern Norway operations, and deploy funds toward other projects.
The transaction is expected to close in December 2019.
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