An Invitation to a Merger: An Icelandic case in Strategy

The companies that are the main players in this case are the two largest marketing companies in the Icelandic fish industry, the Union of Icelandic Fish Producers Ltd. (UIFP) and the Icelandic Freezing Plant Corporation (IFPC). They were both traditionally co-operative companies owned by producers in the Icelandic fish industry until they were changed to Limited Liability Companies in 1993 and 1997. The markets for Icelandic fish products have changed considerably during the past two decades. Europe has become the most important market and the Japanese market has increased its share considerably. The long term traditional markets like the US and former Soviet Union have declined for the past decade. It is not merely the changes in market areas that affect the fish industry but also changes within the markets. The Union of Icelandic Fish Producers Ltd. (UIFP) was, until 1999, almost entirely in the business of selling salted and chilled fish, while the Icelandic Freezing Plant Corporation (IFPC) has marketed frozen fish. The years 1997–2001 brought significant changes to the export sector in the Icelandic fish industry. The Icelandic Herring board was changed into Islandssild hf. in July 1998 and merged with the Union of Icelandic Fish producers (UIFP) on 1st January 1999, making it the third largest marketing company for fish in Iceland. Icelandic Seafood, then Iceland’s second biggest marketing company merged in 1999 with UIFP, making the new UIFP the largest marketing company for fish in Iceland. IFPC, formerly the largest marketing company in Iceland, showed unsatisfactory performance in 1998 and 1999, forcing them to change their operation, mainly by focusing more on their core activity, the sale of frozen fish. Hence, IFPC has gone out of related businesses, such as transportation, and sold its share in other companies. After 1999 only two of the four Primary Marketing Companies are still in operation. To further meet changes in the global industrial environment, UIFP has expanded and diversified its operation from being only a marketing company for salted fish into becoming an international marketing company focusing on chilled and frozen fish. At the same time IFPC has focused its operation on being an international marketing company for frozen fish. Through time there have been pressures toward the merger of IFCP and UIFP but without success. At the annual meeting of IFPC for 2001 the chairman of the board suggested that these two companies should merge. He claimed that with the merger of the two companies they would save up to ISK. 500,000,000 and increase their competitive status globally as well. This case ends at that time, leaving the readers with unanswered questions regarding the future of the companies. JEL classification: L1, L2 Keywords: Strategic Management, Case studies, Union of Icelandic Fish Producers, Icelandic Freezing Plant Corporatio

The Icelandic Fishing Industry: a Comprehensive Overview Until the end of 2001

This paper gives a short but comprehensive overview of the Icelandic fish industry, its history, development and structure until the end of the year 2001. The definition of a fish industry will focus on catching (the fishing sector and fish farming), processing and export. The paper reveals a revolutionary development in the Icelandic fish industry from a supplement to farming in the Middle Ages to a modern high-tech industry. The fish industry in Iceland is at present one of the central industries in the country, and has a leading position in the world. The authors argue that these developments have been brought about by structural transformations, such as the introduction of a quota system, technical development, deregulation and privatisation, mergers and increased concentration, as well as changes in export and marketing. JEL classification: O3, Q22 Keywords: Fishing industry, Iceland, catching, processing, expor