Cooke to net former Stolt salmon farms

After more than eight months of negotiations, Cooke Aquaculture Inc. of St. George acquired the former Stolt Sea Farm's east coast farming and processing assets during the last week of December. With the acquisition, Cooke Aquaculture will be producing all of the farmed salmon in Maine and about 70% of the New Brunswick harvest.

"We are committed to developing a strong and sustainable salmon farming sector in the region," says Glenn Cooke, CEO of Cooke Aquaculture. "This is our home and we will continue to be a leading employer and important contributor to the province's economy."
The company presently harvests about 30,000 metric tonnes of salmon annually from its farms in Maine, New Brunswick and Nova Scotia, and with the Stolt acquisition that amount is expected to increase to between 30,000 and 40,000 metric tonnes, according to Nell Halse, director of communications for Cooke. The company will be placing about 6.5 million smolts in its saltwater farms in the spring, including 2.4 million in Maine.

Last April, Stolt Nielsen and the Dutch company Nutreco merged into a joint venture called Marine Harvest, which is now the world's largest aquaculture company, with over 6,000 employees. With just over 200 people in Marine Harvest's east coast operations in the Maritimes and Maine, Cooke will now have well over 1,000 employees. This past year Cooke also purchased the Canadian east coast and U.S. operations of Heritage Salmon.
Before its operations were acquired by Cooke, Marine Harvest let go about a half dozen senior management staff. "We want to keep as many jobs in New Brunswick and Maine as possible," says Halse. Marine Harvest also laid off some employees temporarily this winter, but those layoffs would have occurred anyway, and the workers will be brought back once fish are placed in the water this spring, according to Halse.

However, Heritage and Stolt's east coast operations lost $30 million last year, while Cooke has been profitable every year for the past 20 years, according to Halse. "They have some serious financial issues. Some change has to happen. We need a turnaround plan," she says, noting that the company will be welcoming suggestions from employees.

With the Marine Harvest purchase, Cooke will be acquiring 13 active sites, three hatcheries, a processing plant in St. George and a value-added plant in Connecticut. Cooke will have 60 to 70 farm sites, including 24 in Maine, 10 hatcheries, two processing plants in St. George, the former Heritage processing plants in Black's Harbour, Beaver Harbour and Eastport, the former Atlantic Salmon of Maine processing plant in Machiasport, a plant in Charlottetown, PEI, and one in Connecticut.

"There will have to be some consolidation," says Halse. If there are enough fish being grown in Maine waters to justify having a processing plant there, then Cooke will reopen the Machiasport plant, but Halse notes that it takes two years to grow fish to market size. "I don't think we will reopen the Eastport plant," says Halse. "It makes more sense to have one top-notch facility in Maine." Cooke has not yet made a decision concerning the Marine Harvest plant in St. George, but since Cooke also has a plant in St. George, Halse says there "likely will be consolidation there."

Settlement with AG's office
As part of the approval of the acquisition, the Maine Office of the Attorney General reached a settlement on December 22 in an antitrust suit that challenged the acquisition, since it would have placed Cooke in a virtual monopoly position, controlling most of the lease sites in the state suitable for raising salmon. Although five other companies still hold leases in the state, none of them are presently raising fish. A court-ordered consent decree requires Cooke to surrender four leases to the Department of Marine Resources to bring the company into compliance with the state's limit of 500 acres that can be leased by one company. Those four sites being terminated are Cooper Island Ledge in Cobscook Bay and Johnson Cove off Eastport, both of which were Stolt sites, and Dyer Island and Flint Island in Pleasant Bay off Harrington, which were former Atlantic Salmon of Maine sites. In addition, Cooke is required to divest or sell its interest in two significant salmon aquaculture sites in Cobscook Bay, known as Prince Cove and Rodger's Island, within six months. Both of those sites were leased by Stolt. With the termination and divesting of the six sites, Cooke will be approximately 60 acres under the 500-acre cap.

"We wish Cooke well and we would like to see competition thrive," says Assistant Attorney General Francis Ackerman, who handled the case. "If they can expand production sufficiently, they have assured us they will reopen the Machiasport processing plant, a facility essential to the future of the industry in Maine. At the same time, we hope to encourage the emergence of new players in the industry. Monopoly is never healthy, and that is why we have antitrust laws."

"Our goal is to safeguard competition and encourage new entry into the industry," says Ackerman. "We're hopeful and optimistic that new companies will step forward."
Halse says that Cooke was aware of the acreage cap and initiated the discussion with state regulators. She says the settlement with the AG's office did not slow down the negotiations with Marine Harvest and that they continued from last spring to December. "It was a complex deal involving different countries," she says, noting that Stolt was merging with Nutreco at the same time. Last August, Marine Harvest had reported that negotiations with Cooke Aquaculture had ended, but Cooke maintained that the talks were ongoing.

Significant investment planned
“There's a lot of opportunity and potential here," says Halse. "We will be able to standardize plans and practices." Cooke will be able to implement its fish health management practices at all of its sites and will be able to assist with the restructuring of the industry in New Brunswick. Under a new bay management system, groups of sites will be on the same schedule for having farms with smolts or market-sized fish or for being fallow. Bay management discussions with all of the fish farmers in the province are presently under way, and a number of plans are being considered. The bay management plan will also be coordinated with Maine farms, so that Passamaquoddy and Cobscook bays are harmonized for when smolts are placed in the water and when the farms are fallow. That coordination should help with managing the deadly infectious salmon anemia (ISA) virus.

"The Cooke family is very committed to the area. They're not investing in other countries," comments Halse. "They will make sure it does work."

Salmon production in Maine has dropped from 36 million pounds in 2000 to 18.7 million in 2004. "Our intent is to put a lot of fish in the water and build up the business," says Halse, noting that Cooke has already invested $24 million into Maine. "We can invest significantly now."