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SalMar To Aquire Villa Miljlaks AS

Salmonids Economics +2 more

NORWAY - SalMar has announced its entry into an agreement to acquire 100 per cent of the shares of fish farming company, Villa Miljlaks AS.

The purchase price for the shares is set to NOK 14 million. The company has approximately NOK 100 million in net debt and leasing commitments.

SalMar Farming AS is acquiring the shares, while the activity in Villa Miljølaks will be reported as part of segment Rauma.

Villa Miljølaks holds three fish farming licenses. Two licenses for the production of organic salmon (awarded in the licensing round in 2009) and an R & D license that runs until 31 December 2012. In addition, the company operates an R & D license for Aalesund University College that runs until June 2012.

The company expects to harvest around 2,500 tons gutted weight in 2011, of which approximately 1,700 tons is scheduled for the second half of the year. The total production capacity for the four licenses is about 4,000 tons gutted weight per year.

The R & D activities of the company's two R & D licenses are aimed at projects related to use of wrasse/cleanerfish to combat salmon lice, which is an established priority for SalMar - and an area where the group holds considerable expertise. SalMar look forward to a continuation of the established R & D partnerships with existing external partners.

SalMar already owns three licenses related to the farming of organic salmon, and this acquisition will strengthen SalMar's commitment and ability to deliver for this market.

Organic salmon has higher production costs than normal production, but also achieve higher prices in the market place.

To achieve a higher level of efficiency and strengthen operational benefits, SalMar has a long term strategy to co-locate the operation of the Groups organic licenses in the Møre & Romsdal region.

SalMar aims to achieve equally good margins on its production of organic salmon as it does on its regular salmon production.

Completion of the transaction is subject to due diligence, board approval and approval from competition authorities in Norway. The transaction is scheduled to be completed 11 July.