Oslo Business Memo


Why should a government invest in an aquaculture company?

Rebekka Glasser Herlofsen, left,  chair Cermaq and Yutaka Koyaya, executive director, Mitsubishi Corp. Photo: Scanpix

Rebekka Glasser Herlofsen, left,  chair Cermaq and Yutaka Koyaya, executive director, Mitsubishi Corp.
Photo: Scanpix

Probably  better if the government did use the money invested in Cermaq different.

Ogne Øyehaug

Ogne Øyehaug

Through its ownership in Cermaq, an aquaculture and fish feed company; the Norwegian government became a major player in the international aquaculture business. Recently, the government split and sold Cermaq to foreign investment funds and a Japanese corporation.
The ancestor of Cermaq was ”Statens Kornforretning”, a state monopoly that managed and controlled the import of grain to Norway. In 1995, the monopoly was suspended, partly because it was illegal according to international trade agreements.
Instead of liquidating the company, the government found a new role for it. ”Statens Kornforretning” did own a few shares in the fish feeding business, and entered the aquaculture business, changing its name to Cermaq.
Among some major politicians at the parliament there where both anger and fear after Norsk Hydro decided to sell its subsidiary Hydro Seafood to the Dutch company.  Hydro Seafood was then the biggest salmon company in Norway and the politicians where afraid that foreigners would take control.
With former finance minister Sigbjørn Johnsen as chair, Cermaq bought the fish feed producer Ewos for 1, 8 billion NOK in 2000. Afterwards Cermaq bought itself into becoming one of the major salmon producers in Chile, and entered Canada and Shetland.
As owners of 80 % of the company the government invested 1.2 billion NOK in new equity, in order to finance the acquisitions. A majority in the parliament, consisting of Labour, the Socialist Party, the Christian Democratic Party and the Liberal party, approved the decision.
In order to get the money, Cermaq had to promise to keep its headquarter in Norway and conduct its scientific and development work in Norway.
Private owners in the aquaculture business had some problems understanding why the government invested Norwegian tax-money in competing companies in Chile, but where newer heard.
Rather early on in the history of Cermaq an attempt to merge with Fjord Seafood (now a part of Marine Harvest) failed.
With that the politicians dream of making Cermaq a driving force in Norwegian aquaculture was over. Cermaq never became a major player in its home country. It bought some companies in the north of Norway, but never managed to become more than a mid-size company.
In Chile, however, Cermaq was one of the major players, and through its subsidiary Ewos it was one of the three major fish feeding companies in the world.
Last year Cermaq sold the fish feed company Ewos to the investment funds Altor and Bain Capital, for NOK 6.5 billion.  Recently Mitsubishi Corporation in Japan purchased the aquaculture business for NOK 5.25 billion.
It was good business for the government.
But that was not the point. The point was to prevent the Norwegian aquaculture industry from being run and owned by foreign companies, through state ownership.
The irony of it all is that the government-controlled company given the task to secure Norwegian ownership is the same company selling everything.
Maybe Cermaq was a political mistake from the very beginning?
Look at Marine Harvest, the biggest salmon producer in the world. The major shareholder in Marine Harvest does not live in Norway and is not a Norwegian citizen. Norway’s connection to the shareholders in general is not very strong,
However, the headquarter is located in Bergen, and the scientific and development work is mainly conducted in Norway. Marine Harvest has even established its own fish feed factory in Norway, competing with Ewos and the other majors.
What would have happened if Cermaq never was established and ”Statens Kornforretning ” was left to vanish?
Most likely, other companies would have bought the Norwegian aquaculture companies bought by Cermaq. With the government as the major owner they finally became foreign owned. That may have been different without the government meddling in.
Without Cermaq, there would be no Norwegian state-supported salmon companies in Chile competing with Norwegian salmon producers in Norway.
Ewos may have had other owners, but it is difficult to see how government ownership in Ewos has had any influence in the development of the Norwegian salmon industry.
 It would probably be better if the government did use the money invested in Cermaq different, even though it has been a good investment, businesswise.
If the money instead had been put into scientific research, everybody would profit from them, not just one company.  Foreign owners do not move their headquarter from Norway when the most competent workforce, both when it comes to administrative and scientific research workers are to be found in Norway.