Cargill capitalises on growing demand for fish with £959m acquisition of …

17 Aug 2015 | Author: | No comments yet »

Altor and Bain Sell Fish Feed Business for €1.35bn.

Cargill agreed to buy a major Norway-based salmon feed maker for $1.5 billion, its second-biggest acquisition by value and one that bolsters its position in the fast growing global fish feed business. Cargill, the world’s largest grain trader, has bought Norwegian salmon-feed supplier Ewos, in a bid to gain exposure to the fast-growing market for farmed fish and shrimp.LONDON — Cargill said on Monday that it had agreed to acquire EWOS, a supplier of feed for salmon and trout farms, from its private equity owners for 1.35 billion euros, or about $1.5 billion.Altor, a Swedish private equity firm, and Bain Capital, a U.S.-based buyout firm, have agreed to sell EWOS, a Norway-based fish feed producer, to Cargill for €1.35 billion after just two years.

The deal would be the American food and agriculture giant’s first entry into the salmon market, making it a leading supplier to salmon farms as it expands its aquaculture business, Cargill said. This is Cargill’s second aquaculture deal since July, when it announced a $30 million venture with Naturisa to build a shrimp-feed facility in Ecuador. Currently, Cargill’s focus is more on shrimp and tilapia. “This transaction, which is significant and second aquaculture acquisition Cargill has announced in as many months, is a strategic investment in our long-term growth and evidence of our commitment to the growing aquaculture industry,” David MacLennan, Cargill’s CEO said in a statement.

With the EWOS deal, Cargill picks up three manufacturing facilities in Norway, and one each in Chile, Canada, Scotland and Vietnam, as well as two state-of-the-art R&D centers in Norway and Chile. Aquaculture is probably the fastest growing food-producing sector and now accounts for nearly 50pc of global fish consumption, compared with 5pc in 1962 and 37pc in 2002. Einar Wathne, chief executive of Ewos, said: “Cargill and EWOS will create a new, world-class aqua feed supply capability that will support the growth potential for fish and seafood consumption and create new opportunities for customers and employees alike.” Founded in Sweden in 1931, EWOS posted operating revenue of 11.6 billion Norwegian kroner, or about $1.4 billion, in 2014 and employed more than 1,000 people. EWOS’s 225 million-euros of 6.75 percent bonds maturing in November 2020 rose 7.5 cents on the euro to 107 cents, the biggest jump on record, according to data compiled by Bloomberg.

Long-term prospects for the salmon industry are “encouraging” with high demand and limited supply growth, Kjetil Lye, an analyst at Handelsbanken in Oslo, said by e-mail. It will also boost its research and development in the area, with 15 facilities globally. “Aquaculture itself is a fairly young industry but within that sector, salmon farming is the leading — 30 years old,” Nikolik said. “Cargill is acquiring an excellent technological platform.” Cargill is not the first trade house expanding into the fish business. The highest value carnivorous fish species need fish meal and sometimes fish oil in their feed but over the years the salmon-feed sector has reduced these ingredients and replaced them with soybean meal and soybean meal concentrate, Nikolik said. “Fish meal and fish oil are increasingly more scarce products.”

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