Booker nets salmon farmer

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The Independent Online
BOOKER, the food group, has bought Marine Harvest International, the salmon farmer with fisheries in Chile and Scotland, for pounds 76m.

The deal makes Booker Britain's largest producer of farmed salmon and, with 7 per cent of total world production, one of the largest in the world. It will be funded partly by existing borrowing facilities and partly by the placement of pounds 42m of shares.

Salmon farms have enjoyed a steady, if controversial, growth thanks to consumption rising by more than 8 per cent each year as eating patterns become more health-conscious and prices fall. One day salmon will be as cheap and popular as chicken, producers hope.

However, news of the deal was greeted coolly in the City. The shares fell 7p to 143p as analysts worried about Booker's increased exposure to a volatile, nascent industry.

The salmon industry has proved a graveyard for many investors as Norwegian dumping of stocks periodically lowers the price and epidemics, such as that of 1991, wipe out stocks.

The reputation of the fish has also been damaged as complaints arose that the fish were lice- infested, colourless and the cages so cramped their meat was flabby.

Edward Robinson, chief executive of Booker's agribusiness division, says these fears are groundless and hopes the industry has become sufficiently mature to support a new period of growth. Consolidation among producers has dampened the volatility of prices. Reduced occupancy levels in the cages has reduced mortality rates from 30 to 7 per cent and increased the muscularity of the flesh. Colourants in the food have improved tone. Use of fallow periods after harvest have reduced the threat of sea-lice.

'As operational synergies are realised we believe the acquisition will result in enhanced returns to our shareholders,' said Charles Bowen, chief executive.

Michael Bourke of Panmure Gordon said that Booker's already low dividend cover would be further threatened by increasingly erratic revenues.

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