Iceland-based Hampidjan has signed an agreement to acquire Mørenot, a supplier in fisheries, aquaculture and offshore industries.
Hampidjan is pleased to announce that an agreement has been signed with the owners of the Norwegian company Mørenot, private equity company FSN, for Hampidjan’s acquisition of all shares in Mørenot. Mørenot is an international company with operations in around 30 locations around the world. The company provides services and sells products to companies in fisheries, aquaculture and offshore industries.
The purchase price will mostly be paid with shares in Hampidjan, where the current owners of Mørenot will receive 50.981.049 shares in Hampidjan at a calculated price of ISK 112 per share, representing a premium to the last closing price of 20,4 percent. It is planned to increase Hampidjan’s share capital accordingly and following such issuance the sellers’ share will represent 9,4% of Hampidjan’s total share capital. Around NOK 14,0 m (1,4 EUR m) will be paid in cash to the sellers. Mørenot’s net interest-bearing debts amount to NOK 694,4 m (67,1 EUR m). Taking into account the share price of Hampidjan at ISK 112 per share, the enterprise value amounts to NOK 1.100 m, corresponding to EUR 106,2 m, implying an EV/EBITDA 2021 multiple of 8,9x pre synergies for IFRS EBITDA.
The signing of the purchase agreement follows an extensive due diligence process that has now been completed. The purchase agreement is subject to the approval of competition authorities in Iceland, Greenland and the Faroe Islands. The purchase agreement is also subject to the approval of a shareholders meeting of Hampidjan to authorize the Board of Directors of Hampidjan to issue new shares as payment of the purchase price, and that current shareholders of Hampidjan forfeit their preemptive rights to the new shares.
Synergy opportunities
Mørenot’s turnover in 2021 amounted to 129 mEUR and EBITDA amounted to 10 mEUR. Mørenot’s financial statements are prepared in accordance with Norwegian accounting standards (NGAAP), while Hampidjan uses international accounting standards (IFRS). Had Mørenot prepared its financial statements in accordance with IFRS, Mørenot’s EBITDA for 2021 would have amounted to 12 mEUR with turnover remaining unchanged. In comparison, Hampidjan’s turnover for the same period amounted to 173 mEUR and EBITDA amounted to 30 mEUR. The combined turnover of the companies in 2021 would therefore have amounted to around 302 mEUR and EBITDA to 42 mEUR had Mørenot’s statements been prepared in accordance with IFRS.
Mørenot’s total assets amounted to about 181 mEUR at the end of 2021 adjusted to IFRS, and the company’s equity amounted to about 58,6 mEUR. The company’s total debts amounted to about 122,4 mEUR. As such, Mørenot’s equity ratio was 32,4% at year-end 2021.
Mørenot and Hampidjan are similar companies in several aspects as both companies manufacture, sell and service fishing gear and equipment for fish farming as well as producing high performance ropes for the oil industry and offshore wind turbine installations. However, the product range is different, and the companies complement each other in several areas.
The consolidation of Hampidjan and Mørenot will enable significant synergy potential due to increased product availability, optimization of production, integration and a stronger position within core markets.
Mørenot is a world leader in the fishing line market with its own production of quality lines and hooks in Dalian, China. The Dalian facility is a powerful production unit for various productions besides line equipment, and other products include ropes and larger traps for crab fishing.
Hampidjan’s rope and net factory in Lithuania is one of the most technologically advanced facilities in the world and manufactures a number of the products that Mørenot currently purchases from external suppliers, as well as a number of patented products for fishing, oil production and specialized deep-sea projects.
In the field of fishing gear, both companies are leaders in the design and production of bottom trawls. Mørenot has not offered pelagic trawls, where Hampidjan is a leader offering Gloría and Helix pelagic trawls.
More than half of Mørenot’s turnover is related to fish farming in Norway, the Shetland Islands, Scotland and Spain, and about 15% of Hampidjan sales are also related to fish farming in the same areas, as well as in Ireland and Iceland. Both companies produce their own nets for fish farm cages and operate large net workshops in Lithuania where the cages are manufactured. Mørenot has developed a patented connection between cages called Flexilink, a digital platform AquaCom and has also developed floating rings for the cages made of light plastics. The potential for synergy is therefore considerable in this area, and it will be possible to advance further in this growth market based on the strong foundation that exists in both companies.
Increased geographic footprint will allow the companies to cross-sell products in their respective market areas. Hampidjan has operations in 15 countries around the world and Mørenot has operations in 8 countries, including three areas where Hampidjan does not have its own operations. In some regions, it would be suitable to combine operations under one roof, but in other regions, it will be possible to offer a greater breadth of product range.
Hampidjan’s turnover has originated from a diverse portfolio of countries in recent years and only about 15% stems from sales to Icelandic companies. Following the merger, around 10% of the group’s income will come from sales to Icelandic entities. The group’s largest market will be Norway with around 32% of revenues, and 10 countries will have a revenue share of 3-10% each.
Hampidjan currently employs 1,250 individuals and Mørenot approx. 750, as such the combined company will employ around 2,000 people in 18 countries.
Intention to list on the Main Market of Nasdaq Iceland
Hampidjan aims to seek admission of its shares, which are currently listed on Nasdaq First North, to trading on the Main Market of Nasdaq in Iceland in 2023. It is assumed that in conjunction with the listing, Hampidjan’s share capital will be increased in order to diversify the shareholder base, refinance Mørenot’s debts, and to secure capital for additional investments in Hampidjan’s production activities in Lithuania, allowing the company to expedite the realization of synergies through the sale of products within the group.
“Mørenot is a company that we have long seen as a suitable addition to the Hampidjan group, as both geographical distribution and product offering fit well together and the companies have significant potential to support each other in a variety of areas,” said Hjörtur Erlendsson, CEO of Hampidjan.
“There exists great potential for achieving synergy through optimization and integration as well as increasing product sales in areas where the companies, respectively, have not had good access to markets. This potential exists in all aspects of operations, including fishing gear, fish farming products and services for fish farming or high-tech rope solutions for the offshore industry,” he said.
“Hampidjan is a world leader in the fishing gear market and is considered the largest entity within the sector. The merger will strengthen our position significantly and give us the opportunity to grow even further.”
“We are happy to welcome the current owners of Mørenot to our shareholder group and to have the opportunity to further strengthen the shareholder base when we move the company from First North to the Main Market of Nasdaq Iceland,” Erlendsson added.
“Over the last years we have seen clear trends of increased professionalization, growing need for economies of scale, sustainability, and digitalization in our industry. Mørenot has therefore been focusing on improving our operational efficiency and building structure capital in parallel with participating in various market consolidation discussion. The combination of the two companies is a really strong one, and we could not have found a better match. We look forward to be a part of this great joint unit”, said Espen Asheim, Chairman of Mørenot.
