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EC Casts Net Around Marine Harvest

BRUSSELS (The Deal) -- Did Norwegian salmon farmer Marine Harvest ASA jump the gun on an acquisition completed in December 2012?

The European Commission thinks so. On Monday it sent the New York-listed company a statement of objections, for completing the deal before having permission to do so.

Regulators claim Marine Harvest notified them about the acquisition of a 48.5% stake in Norway's Morpol ASA, the world leader in smoked and marinated salmon processing, only last August, eight months after it purchased the stake for 937.6 million Norwegian kroner ($156.7 million) in cash and shares.

Marine Harvest snapped up Morpol before its failed attempt to take over Oslo-based Cermaq ASA, which later sold its Ewos AS fish-feed unit to Bain Capital LLC and Altor Equity Partners.

After a routine investigation into the Morpol deal, the Commission last September gave Marine Harvest conditional approval to buy Morpol after the buyer agreed to sell farming operations in Scotland. Last week, Marine Harvest announced an agreement to sell operations on Scotland's Shetland and Orkney Islands to Canada's Cooke Aquaculture plc for an enterprise value of 122.5 million pounds ($203.5 million) - though noted that the EC must still approve Cooke Aquaculture as the purchaser, and the transaction itself and the sale terms.

Marine Harvest made no secret of the fact that it completed the Morpol acquisition on Dec. 19, 2012, just two days after announcing the agreement. It announced the deal's completion in a press release, still on its website.

But a press release does not count as an official notification under EU merger rules.

The EC argued that Marine Harvest failed to notify the regulator of its intent to acquire Morpol before it was implemented, in breach of the EU Merger Regulation. Monday's announcement included the standard disclaimer that the sending of a statement of objections does not prejudge the final outcome of the investigation. The EC also noted that the investigation has no impact on its decision back in September to clear the Morpol takeover, because it does not change its analysis of the market.

If found guilty, the Bergen-based company, which made a splash with an initial public offering on the New York Stock Exchange in January, faces a fine of up to 10% of its annual worldwide revenue. It posted a record revenue of Nkr19.2 billion in 2013, up from Nkr15.6 billion in 2012.

Marine Harvest on Monday acknowledged the EC's investigation and that it may lead to a fine. "Marine Harvest does not expect such fine to be material," it said.

Marine Harvest shares closed Friday at around $11.68 in New York, little changed from the previous day.

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