Bakkafrost, Scottish Seafarms and Cooke frontrunners to buy Grieg’s Shetland operations

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Analyst predicts EUR 150 million price tag.

On Tuesday, Grieg posted its latest results and announced that it is “evaluating a divestment of Grieg Seafood Shetland”.

When asked Grieg why no one is yet willing to buy GSF Shetland, Grieg Seafood communications manager Kristina Furnes told SalmonBusiness “that is not the case”. She said that the company is initiating a strategic review of all of its Shetland operations, aiming to sell when the time is right.

Pulled
In 2016, GSF Shetland ended up being pulled from the market as no one was willing to meet the requested price. The site comes with 17 active seawater licences, one freshwater facility and one harvesting facility.

“We expect the process to be completed during 2021, though there is no defined timescale set,” added Furnes.

Christopher Robin Vinter, analyst at Sparebank1 Markets. Photo: Sparebank1 Markets

Frontrunners
In a financial bulletin on Wednesday, Sparebank1 Markets’ salmon analyst Christopher Robin Vinter gave his industry favourites to buy the site, and at what cost. “Potential buyers are of course Bakkafrost, but also Scottish Sea Farms/Norskott Havbruk (owned 50/50 by LSG and SALM), Cooke Aquaculture, or a new buyer could also emerge,” he said.

“We believe Shetland can be divested for NOK 1 billion – NOK 2 billion (around EUR 150 million .ed), and view a price in the mid-range as the most likely outcome,” said Vinter.

Carnegie analyst Lars Konrad Johnsen told SalmonBusiness that what’s going on in terms of the Scotland sale is difficult to explain.

“When you look at what’s going on around Skye, the figures talk for themselves,” he said. “For Shetland, I am uncertain about the performance going forward and also the initiation of the sale process if there are really some buyers out there that will be able to meet the price and valuation point that the company has”.

Strange
Johnsen said he would have to dig into the details but what was curious about today was that Grieg “talked about the Scottish region as something that they had almost sold already as a disposed region”. “So I don’t know what their plans are really,” added the analyst.

Carnegie’s analyst Lars Konrad Johnsen (left) talking to portfolio manager Hogne Tyssøy of Holbergfondene. Photo: Aslak Berge

“It’s almost strange when you initiate a sales process in a period of time when obviously things are not moving in the right direction. Also in the whole market, it’s very challenging, I am sure this will be a 6-12 month process,” said Johnsen.

He added that in terms of equity, knowing where Grieg will be in 3-5 years is difficult.

“With Grieg, you have the thinking around disposed of areas in Scotland. At the same time, they are spending a lot of money on the greenfield project up in Newfoundland in Canada. You got liquidity that’s obviously pressing and will probably be even more challenging as we move to 2021, even at the kind of CAPEX level over the next six months. That’s why I am saying it’s a difficult equity question. It is not that straight-forward as it is for the other names,” he concluded.