Norway Royal Salmon ASA to proceed with the acquisition of SalmoNor AS and merge with SalMar ASA

Trondheim, 30 May 2022

• Norway Royal Salmon ASA (“NRS”) and SalMar ASA (“SalMar”) (“the Parties”) have entered into a merger plan whereby the two entities will merge, with SalMar as the acquiring company in the merger (the “Merger”).
• The agreed exchange ratio is based on the average volume weighted closing share price of SalMar from 4 April to 20 May 2022. Based on an exchange ratio of 0.369 shares in SalMar per share in NRS, this results in a value of NOK 265.18 per NRS share, which gives a premium of 6.3% to the NRS closing price Friday 27 May 2022, and 12.1% to NRS’ average closing share price over the past 30 days.

• The rationale behind the Merger is to increase value creation in the regions where the companies operate and enable the realization of synergies between the companies.
• The Merger is conditional on NRS acquiring SalmoNor AS (“SalmoNor”) immediately prior to the consummation of the Merger, and that all conditions for the completion of SalMar’s voluntary tender offer for the shares in NTS ASA (“NTS”) (the “NTS Offer”) have been met or waived, or the NTS Offer has been completed.

Rationale

The Parties have several overlapping industrial interests, both in Norway, the West Fjords of Iceland, and offshore. A combination of the Parties enables the realization of significant synergies:

• Both Parties have a long-standing presence in, and considerable competence from, salmon farming in Norway. The Merger will allow for improved utilisation of the combined available MAB and site portfolio as well as improvements in operations and cost.
• NRS’s new smolt facility in Dåfjord outside Tromsø, together with SalMar’s development of the Senja 2 and Tjuin facilities will, together with the Parties’ existing smolt capacity, be valuable resources that can ensure delivery of the right smolt at the appropriate time, which in turn will facilitate improved biological results throughout the value chain.
• SalMar’s new processing plant on Senja, InnovaNor, will attain large additional volumes through the Merger. This will allow economies of scale through improved capacity utilisation and logistics and reduce biological risk.
• SalmoNor has operations throughout the value chain and has delivered solid results over several years. SalmoNor is located in Rørvik, in production area 7, and will thus complement SalMar’s operation in Mid-Norway.
• Both parties have significant expertise in sales and logistics, and the Merger will improve access to customers worldwide.
• Both SalMar and NRS have made significant investments in offshore related farming technology, creating a large synergy potential. The Parties will jointly be a strong force in the further development and realisation of offshore farming.
• Both parties operate in the West Fjords of Iceland through Icelandic Salmon (controlled by SalMar) and Arctic Fish (controlled by NRS). Together the Parties may realise significant synergies through e.g. improved operations at sea and an optimal structure in the onshore value chain, including smolt, processing and sales.
• A combination will strengthen the competence and capacity of the Parties, and position them for further sustainable growth. The Parties have strong company cultures, and the anticipated production growth they expect going forward will strengthen the company’s position as an attractive employer requiring competent, local employees.
• The Merger will create an entity that is financially stronger, driven by increased revenue and expected cost synergies.

Paal E. Johnsen, Chairman of NRS, says in a statement that “a merger between NRS and SalMar is based on a sound industrial rationale, while also securing a good solution for the shareholders of NRS. Through the merger, the shareholders will receive a frequently traded share, and may expect significant synergies and strong dividend capacity, in a merger that values the NRS share at a historically high level.”

Leif Inge Nordhammer, Chairman of SalMar, says in a statement that “a merger between SalMar and NRS makes sense. We join strong teams that encompass the best salmon farming know-how in Norway. The Merger will also allow synergies to be earlier and better realised than solely through the completion of SalMar’s voluntary tender offer to acquire all shares in NTS.”

Terms and conditions

The transaction will be completed in two interlinked stages.

First, NRS will immediately prior to completion of the Merger carry out the agreed takeover of SalmoNor from NTS, where settlement will be in cash and NRS shares, in line with the existing and amended agreements. The NRS share price that will be the basis for the SalmoNor settlement will be equal to the value of the NRS share agreed in the Merger. The cash settlement of the SalmoNor transaction will be paid through the issue of a debt instrument that will be settled following the completion of the merger between SalMar and NRS. NTS and NRS/NRS Farming have entered into additional agreements related to the SalmoNor transaction to regulate this. This means that the board of NRS has determined to propose to the general assembly of NRS that the following equity issue is carried out:

• The share capital of NRS is increased by NOK 15 360 452 through the issue of 15 360 452 new shares, each at NOK 1 par value, at a subscription price of NOK 265.18 per share; for a total subscription amount of NOK 4 073 284 661.
• As settlement for these shares, NTS will transfer to NRS an obligation to pay NRS Farming AS NOK 4 073 284 661; emerging from the completion of the SalmoNor transaction. All the new issued shares are to be transferred to NTS.
• The equity issue shall be carried out at the same day as the completion of the SalmoNor transaction, and immediately prior to the completion of the Merger between SalMar and NRS. The execution of the equity issue is conditional on NRS and SalMar having declared that all conditions for completion of the Merger have been met and that it will be carried out immediately following the equity issue.

Immediately thereafter NRS will merge with SalMar, whereby both existing shareholders in NRS and the shareholder who has just received newly issued NRS shares at the settlement of the acquisition of SalmoNor, will receive consideration in SalMar shares and a cash consideration, in line with the agreed merger plan.

• The Merger will take the form of a statutory merger whereby SalMar will absorb NRS, in accordance with the Norwegian Public Limited Liability Companies Act.
• As merger consideration the shareholders of NRS will receive 0.303933 shares in SalMar and NOK 52.84 in cash for each share held in NRS, which in total provides the shareholders in NRS with an ownership interest of approximately 12.3 % in SalMar upon completion of the Merger, and the NTS Offer.
• If the previously announced dividend of NOK 20 per share from SalMar is not approved with a record date prior to completion of the Merger, the shareholders of NRS will instead receive 0.295475 shares in SalMar for each share held in NRS, while the cash consideration will remain unchanged.
• Fractions of shares will not be allotted, and for each shareholder the shares will be rounded down to the nearest whole number. Any excess shares following round down will not be allotted, but will be issued to and sold by Arctic Securities AS; the consideration to be distributed pro rata between the shareholders who were entitled to such fractions of shares.
• Completion of the Merger is subject to approval by the shareholders of each of SalMar and NRS through extraordinary general meetings, expected to be held on or about 30 June 2022 (the "EGMs").
• Kverva Industrier AS, holding approximately 50.88% of the shares in SalMar, LIN AS, holding approximately 1.10 % of the shares in SalMar, and NTS, holding approximately 68.14 % of the shares in NRS, have undertaken to attend the respective EGMs and vote in favour of the Merger.
• In addition to approval by the EGMs, completion of the Merger is also subject to
  • (i) SalMar having announced that all conditions for completion of the NTS Offer, as regulated in an offer document from SalMar dated 17 March 2022 (the “NTS Offer Document”) has been met or waived (or the NTS Offer has been completed);
  • (ii) NTS having transferred all shares in its subsidiary SalmoNor to NRS and NRS having issued and delivered 15 360 452 new shares in NRS to NTS as partial consideration for SalmoNor; and
  • (iii) all required approvals for the Merger from competition authorities and any other relevant public authorities having been granted unconditionally or on conditions that will not have a material adverse effect on the business of the merged companies or materially alter the basis for the exchange ratio in the Merger.
• Subject to approval of the Merger by the respective EGMs, it is expected that the Merger will be completed during the third quarter of 2022.
• Further information about the Merger will be made available in the merger plan for the Merger.
• The Merger will not have any impact on - or result in any adjustments to – the NTS Offer, the terms and conditions of which are set out in the NTS Offer Document and separate stock exchange notices published by SalMar relating to the NTS Offer.

Financing of the cash part of the merger proposal

SalMar has a number of available funding sources that do not impact SalMar’s dividend capacity or investments in the value chain, including, but not limited to, available cash and debt financing capacity based on SalMar’s sound financial position.

Advisors

Carnegie AS acts as a financial advisor and Wikborg Rein Advokatfirma AS acts as legal advisor to NRS.

Arctic Securities AS acts as financial advisor and Advokatfirmaet BAHR AS acts as legal advisor to SalMar.

Information

A digital analyst’s conference will be held Monday 30 May 2022 at 9 AM CEST, where representatives of the companies will participate. To participate in the digital analyst’s conference, please send an e-mail to Arctic Securities at events@arctic.com.

A press conference will be held on Monday 20 May 2022 at 2 PM CEST, in the auditorium of SpareBank 1 SMN in Søndre gate 4 in Trondheim. At the press conference, representatives of both companies will give a joint presentation of the Merger plans, and be available to answer queries. This will be carried out in Norwegian. The press conference will be webcasted at the company website www.norwayroyalsalmon.com.

For further information, please contact:

Charles Høstlund, Interim CEO at NRS

Tel: +47 994 18 449

Paal E. Johnsen, Chairman of the Board of Directors at NRS

Tel: +47 484 02 000

This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

This stock exchange announcement was published by Bjørn Kleven, Interim CFO at Norway Royal Salmon ASA, on 30 May 2022 at 08:00 CEST.

About NRS

The Norway Royal Salmon (NRS) group owns 36 085 tonnes MAB for salmon farming

located in Troms and Finnmark, and 21 800 tonnes MAB for salmon farming and 5 300 tonnes MAB for trout farming in Iceland through the company Arctic Fish. In addition, the group has minority interest in two associated Norwegian fish farming companies which together own 9 fish farming licenses. NRS is an attractively positioned fish farming group, which offers salmon to the market through its own sales organisation. For further details, please visit www.norwayroyalsalmon.com.

About SalmoNor

SalmoNor is a fully integrated salmon farming company headquartered in Rørvik. The company owns 21 195 tonnes MAB and produces salmon on the Namdal coast. SalmoNor has an annual production capacity of up to 40 000 tonnes salmon. The company has holdings in Osan Settefisk, SalmoSea, Mnh Rederi, SalmoTech and SalmoNor Settefisk.

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Important information:

The release is not for publication or distribution, in whole or in part, directly or indirectly,  in  or  into  Australia,  Canada,  Japan,  the United States (including  its territories and possessions, any  state of the United States and the  District of Columbia) or any other jurisdiction where such publication or distribution would violate applicable laws or rules. This release is an announcement issued pursuant to legal information obligations and is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. It is issued for information purposes only and does not constitute a notice to a general meeting or a merger prospectus and as such, does not constitute or form part of any offer to sell or purchase, or solicitation to purchase or subscribe for any securities, in the United States or in any other jurisdiction. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "US Securities Act"). The securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the US Securities Act. Copies of this announcement are not being made and may not be distributed or sent into Australia, Canada, Japan, the United States or any other jurisdiction where such distribution would violate applicable laws or rules. Neither SalMar ASA nor Norway Royal Salmon ASA, or any of their advisers assume any responsibility in the event there is a violation by any person of such restrictions. The distribution of this release may in certain jurisdictions be restricted by law.  Persons into whose possession this release comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

No adviser of Norway Royal Salmon ASA  or SalMar ASA is acting for anyone else than Norway Royal Salmon ASA or SalMar ASA, respectively, and will not be responsible to anyone other than such party providing the protections afforded to their respective clients or for providing advice in relation to any other matter referred to in this release.

Forward-looking statements:

This release and any materials distributed in connection with this release may contain certain forward-looking statements. By their nature, forward-looking statements   involve risk and uncertainty because they reflect current expectations and assumptions as to future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.