Deal between Russia's leading processor/importer and Austevoll Seafood indefinitely postponed

September 11, 2007 16:22

Though the shareholders of Moscow-based Russian Sea Group of Companies have turned down the earlier publicized deal with Austevoll Seafood ASA (AUSS) to sell up to 20% of the group's shares to this foreign company at 100 million USD, the door may still be open for the cooperation to go ahead in the future, according to Russian media reports.

Chairman of the Board of Austevoll Ole Rasmus Møgster has reportedly confirmed that the deal will not be signed at least in 2007. Austevoll still sees a lot of possibilities for cooperation, but as per early September the negotiations on the issue have been halted and the company hopes to resume talks in 2008, Mr. Megster said.

Chairman of the Board of JSC Russian Sea Maxim Vorobyov has explained that, according to the agreement with the Norwegian company, the deal should have been signed until 15 August. Taking into account that by the above day no decision has come from the Norwegian side, the Russian company has decided to postpone the deal to January 2008.

The deal's rejection has been also provoked by the statement of Andrey Krainy, head of the Russian Federal Fishery Agency, about a potential ban on quota allocation to companies with a foreign capital stake. The ban is expected to be soon included into the current legislation, said a spokesman of the agency.

Background

The Letter of Intent towards the aborted partnership was signed on 9 July 2007 with the project strategically targeted at developing the group's operations in Russia. The goal should have been met based on Austevoll's longstanding experience in the international seafood trade and Russian Sea's strong positions on the market.

At present the Group's legal and financial expertise of the project has been finished with the synergy sources for the both companies having been outlined in greater detail.

The key role in making decision to turn down the deal has been played by high growth rates of Russian Sea driven by own resources. In the first half of 2007 the group's member companies JSC ZAO Russian Sea and JSC ZAO Russian Fish Company displayed the following growth of sales: by 72% to RUR1.47 billion for Russian Sea and by 88% to RUR4.92 billion for Russian Fish Company. Such positive results of the group's operations are indicative that its plans of public offering of shares in 2009 can be successfully realized. It is thought that during the initial public offering the fair value of the business will be defined, while under the current conditions private offering of the share in the capital is seen as not to the advantage of the group.

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