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Bakkafrost to acquire Scottish Salmon Co. for $633.4M

Faeroe Islands-based fish farming company P/F Bakkafrost will acquire The Scottish Salmon Co. PLC from Northern Link Ltd. for 4.35 billion Danish kroner ($633.4 million).

Bakkafrost will acquire a 68.6% stake in Scottish Salmon Co. at 28.25 Norwegian kroner per share. Once the deal is completed, Bakkafrost will launch a mandatory offer to buy the remaining 31.4% free float in the salmon producer.

The offer represents an 8.5% premium to three-month volume-weighted average price of Scottish Salmon Co. shares, implying an enterprise value of 4.35 billion Danish kroner and the enterprise value per EBITDA multiple of 7.2x.

Bakkafrost plans to fund both the transaction and the following tender offer with a mix of debt and equity, including an accelerated bookbuild offering of 15% of Bakkafrost share capital, a directed share issuance of 5% of Bakkafrost share capital to Northern Link and an additional debt facility to fund the acquisition of potentially up to 100% of the outstanding shares in Scottish Salmon Co.

The transaction is subject to EU regulatory approval.

The Edinburgh, Scotland-headquartered salmon producer reported a harvest of 29,913 tonnes in 2018 and 18,463 tonnes in the first half of 2019, claiming a total harvest capacity of 50,000 tonnes. The company generated an EBITDA of £56.7 million in 2018.

Bakkafrost sees the potential for material improvement in Scottish Salmon Co.'s profitability over a five-year period through "realization of identified synergies, transfer of best practices and a targeted investment program."

The transaction will provide Bakkafrost access to the Scottish farming region creating a "combined differentiated global leader in premium salmon with dual exposure to both Faroe Islands and Scottish premium salmon."

DNB, Goldman Sachs International and Nordea acted as joint financial advisers to Bakkafrost, while Daiwa Corporate Advisory Ltd. acted as financial adviser to Scottish Salmon Co.

As of Sept. 25, US$1 was equivalent to 6.82 Danish kroner and 9.05 Norwegian kroner.