Two of Alaska’s largest seafood companies are merging their Alaska salmon and Gulf of Alaska groundfish processing businesses. Icicle Seafoods and Ocean Beauty Seafoods will be combining forces to create OBI Seafoods.
Talks of a potential merger have been circulating for months. There’s been speculation in the seafood industry press that the two Seattle-based companies are seeking to remain competitive against the other major industry players in Alaska.
“To meet the strength of Trident Seafoods and Silver Bay Seafoods, Icicle and Ocean Beauty really needed to do this,” Drew Cherry, editor of IntraFish, said on Friday.
He first reported on a possible deal exactly a year ago. He said it’s driven by a big-picture trend: More processing plants than fish to fill them.
“There’s a lot of overcapacity in the Alaska salmon processing sector. It’s not exactly a sector that’s doing that well right now,” he said.
The Icicle and Ocean Beauty collective venture will own 10 shoreside processing plants across coastal Alaska. Several are on Bristol Bay but there are also plants in Cordova, on Kodiak Island and in Southeast including Petersburg.
There have been upgrades to some of the plants in Bristol Bay, said Cherry, who grew up in the region.
“But beyond that a lot of these Alaska salmon facilities — they’re not in great shape,” Cherry said.
Ocean Beauty CEO Mark Palmer will lead the new venture — OBI Seafoods. He said since 2016 the two companies have invested $50 million into their plants. He bristles at the suggestion that those operations have fallen behind.
“When you drive by a plant and look at it from the outside, it may not look that much different,” Palmer said. “When you go inside; they’re significantly different.”
He said the companies are particularly proud of upgrades to their Wood River plant in Dillingham and are reopening a cannery in Naknek. Overall, he said, the company will redouble its commitment to modernizing its Alaska operations. And this merger will cut costs and allow it to do this.
“The ownership group is not going to take dividends out of the Alaska operation,” Palmer said by phone. “They’re going to plow those back into investments in the plant. So we have a long term commitment … to build up the plants and modernize them.”
The two companies have very different ownership. Half of Ocean Beauty is owned by the Bristol Bay Economic Development Corporation. The other is a small group of Outside investors.
Icicle on the other hand was bought by privately-held Canadian giant Cooke Seafoods in 2016.
“Cooke is one of the world’s largest salmon farming companies,” Cherry noted.
And he said that creates some natural tension with Alaska’s wild salmon industry.
“The majority of — I don’t want to say majority — but a big chunk of the Alaska salmon processing sector is now partly owned or partly controlled by a major salmon farming company,” Cherry said.
CEO Mark Palmer said about half of Cooke’s more than $2 billion sales volume is wild harvest. He said its partners in Bristol Bay raised some concerns but came to see the mutual benefits of a deal.
“It’s certainly some consternation, you know, in the initial conversations with BBEDC,” Palmer said, “But they got past that very quickly, and they recognize that they’re partners with a global seafood giant.”
It’s too early to speculate what the merger will mean for Alaska fishermen and the market price of their catch. Second generation Southeast Alaska fisherman Justin Peeler is the skipper of the 58-foot fishing vessel Defiant out of Sitka. He’s been selling to Icicle for more than 15 years.
“And as an Icicle fisherman, this will be my third merger, if you will, Icicle has bounced around a little bit in that timeframe,” Peeler said by phone.
He said he’s cautiously optimistic the combined company will grow its North American market share. He said Icicle has been a strong company, but has sold much of its fish outside the United States.
“We haven’t had a large domestic presence and I’m excited to see that grow,” Peeler said, “and I think with the merger of the two companies, I think it puts both companies in a position to have that happen.”
Not included in the merger are Icicle’s two floating processing vessels: the Gordon Jensen and the Northern Victor which is permanently moored in Dutch Harbor. Those two vessels will continue to operate under Icicle Seafoods.
Ocean Beauty will maintain its smoked salmon and distribution network under the name OBS Smoked & Distribution.
Terms of the deal weren’t disclosed. A company statement said the combined operations are set to take effect June 1 — in time for Alaska’s summer fishing season.
