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Mackerel merger not a threat

EU - A major merger of three large Norwegian pelagic companies is expected to have only little impact on the operation of Shetland Catch, up to now Europes largest pelagic fish processor.

Yesterday (Thursday), Domstein Pelagic, Global Fish and Westcoast announced their intention to merge their activities and establish the largest pelagic company in the world, with its headquarters in Måløy.

The parties will operate separately during this winter fishing season, and the new company is expected to be operative by the middle of 2007.

The news comes as no surprise to industry insiders as rumours about such a move had been heard for about a year.

Acting chief executive of Shetland Catch, Simon Leiper, said that merging the three companies would lead to an improved profitability for the company.

He was however unconcerned as to any possible impact on Shetland Catch’s position in the global pelagic market.

“Maybe the rationale behind it is to reduce the number of factories they are currently operate, which would make sense as this is something that has been discussed in the industry over the last years.

“We currently compete them as individual companies and, personally, I can see how this position is going to change dramatically.

“They may have an option to reduce their cost structure by merging and allow for them a larger margin to take, but I can’t see this dramatically changing our position with our current customer structure and our current supply base.”

Mr Leiper added that current mackerel prices had recovered to around £800 a tonne after they collapsed from around £1,100 down to £600 at the start of the autumn mackerel season.

He said: “Prices have stabilised and have picked up slightly. The buying prices are now about 25 percent lower than what is was last year, but the sales price has still to do a bit of catching up.

“There is a lower margin at the moment, but the sales price is catching up. With prices coming back compared to last year the market is good and prospects for the coming mackerel season is quite positive.”

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