Agribusiness group IAWS has made its second foray into continental Europe, buying a 34 per cent stake in Norway's second biggest fishmeal and seafood processor for £5.5 million. IAWS has an option to increase its stake in Welcon Pelagic to 50 per cent at a later stage.

IAWS has also increased its presence in the British seafood processing sector with the acquisition of Viper's Seafoods in Scotland for £1.1 million sterling (£1.2 million). Viper's has sales of £4.5 million sterling and processes seafood for the fur and pet-food industry.

IAWS finance director Mr David Martin said the investment in Welcon Pelagic was a major strategic move by the group and was the first time that any non-Norwegian company had invested in the local fishmeal processing industry. Welcon produces about 35,000 tonnes of product a year compared to the 25,000 tonnes produced at the IAWS plant in Killybegs and the 50,000 tonnes in IAWS's plants at Aberdeen and Shetland in the UK.

The decision to take a minority holding was agreed by IAWS and Welcon, but IAWS has an option to increase the stake in Welcon to 50 per cent. It is understood that this option can be exercised in two years time.

Welcon is the second-biggest processor in Norway and is expected to have after-tax profits of £2.1 million in the current year, indicating that IAWS has bought its 34 per cent stake on a multiple of less than eight times 1998 profits.

The group is involved in both fishmeal production and processing of fish for human consumption through its Maloy Seafoods subsidiary. Mr Martin said the businesses were complementary to IAWS's existing operations and would give additional flexibility in attracting supplies for the North Sea fishing fleet. It is understood that the investment consolidates IAWS's position as the third biggest seafood processor in Europe.

Chief executive Mr Philip Lynch said: "World demand for marine protein outstrips supply and we see this sector as a growth area for the future. Norway is the second largest producer of marine protein and oil in Europe and is the largest producer of farmed salmon in the world. On IAWS's expressed interest in bidding for the four Spillers flour mills that Tomkins has been ordered to sell by the British Office of Fair Trade, Mr Martin said that the group had yet to receive an offer for sale document from Tomkins. He added that he expected an offer for sale by Tomkins "in the near future".

Both IAWS and Greencore are seen as frontrunners to bid for some or all of the Spillers mills, which are likely to carry a price tag in the order of £60 million.