It was not the gold diggers who became rich. It was the equipment suppliers.
That was the case at least when gold was found in Klondike, a tributary of the Yukon River, in central Alaska. It was in the latter half of the 1890s, and the infrastructure of the sprawling Dawson City was fragile. The road there was both long and demanding, through inhospitable nature. Gold diggers and horses, in the thousands, never reached their destination. The Dead Horse Trail, which the road was so powerfully called, was a perilous journey, especially during winter. The trip was not facilitated by Canadian authorities, demanding that hopeful gold diggers loaded up with at least one year of gold-digging equipment even before crossing the border from Canada to Alaska.
Those who arrived soon found that the gold rush in Klondike was greatly exaggerated.
A few gold diggers became rich, but most went home with an empty case. The majority of those who made good use of money in the gold rush were the equipment suppliers: those who opened shops, banks, restaurants and brothels.
It is the Klondike strategy companies are aiming for.
Because when the long-awaited consolidation at the salmon farm stage is ongoing, as a function of asking prices have gone to up together with the salmon price, it is the equipment suppliers that grow through mergers and acquisitions.
Last week, Steinsvik, Aqualine and AquaOptima announced that they would merge under the new brand ScaleAQ. Behind the new outfit stands the Witzøe-owned Kverva. ScaleAQ will primarily focus on integrating the three organizations, their product portfolios and common brand, but little indicates that the hunt for acquisitions is over.
On Wednesday afternoon, there was another hard-betting company that announced a new acquisition in “Fish Service”, namely Mørenot. This time it was the Danish Hvalpsund Net that was swallowed by Mørenot. Mørenot also has a “rich uncle” in the background, more specifically the private equity player FSN Capital.
A third big fish in the equipment segment is the listed AKVA group. The Egersund Group is its main shareholder, with just over 62 per cent of the shares. A stock price trading around all time high is a solid acquisition currency for AKVA group.
The will to lift
One must not forget the Andresen family acquisition initiative Broodstock Capital, which has predicted a wave of acquisitions, the most profiled so far has been Billund Aquaculture. The fact that Broodstock has not bought more in the clearly defined target group “small and medium-sized companies” is primarily due to asking prices.
It is not about the ability, but the will to make larger acquisitions.
Although this segment of the value chain has been somewhat consolidated over the past few years, it is still quite fragmented. There’s quite a lot of “cake” left.
Players such as Selstad, Sterner, Botngård, Plany, Liftup, to name a few, are all in the category of possible acquisition targets for the aforementioned predators.
Here’s the Pac-Man method that applies: Eat or get eaten. And it is not a given that one gets the best return on investing their money in salmon stocks or food fishing licenses.
Gold can also be bought for too much.