The City of Oslo plans to create a new fully-owned firm for the purpose of making a voluntary buyout bid for Hafslund ASA (OSL:HNA), valuing the Norwegian power company at about NOK 19.5 billion (USD 2.27bn/EUR 2.08bn).
As part of the move, the City of Oslo will acquire the 34.1% stake in the mid-sized hydropower producer from Finnish utility Fortum Oyj (HEL:FORTUM), according to a Wednesday announcement. Fortum said it will sell its interest for about EUR 730 million (USD 797m), booking a one-time tax-free sales gain of some EUR 330 million.
At present, the City of Oslo and Fortum own shares that, when combined, represent 87.8% of the capital and 91.3% of voting rights in Hafslund. Fortum has already agreed to accept the voluntary offer of NOK 100 per A and B share, less any dividend paid in 2017. Thus, upon completion of the transaction, the City of Oslo will own over 90% of the voting rights in Hafslund.
The agreement between the two parties also includes a number of other transactions such as Fortum’s full takeover of Hafslund’s current Markets business area, which is active in Norway, Sweden and Finland. That move will nearly double the Finnish company’s electricity retail client base in the Nordics from 1.3 million to 2.4 million.
At the same time, Hafslund’s Heat business will merge with the City of Oslo’s waste-to-energy company Klemetsrudanlegget AS (KEA) in order to create an integrated value chain in the waste-to-energy system. The enlarged firm will be operated by Fortum as a 50/50 joint venture with the City of Oslo.
The Finnish utility will also buy a 10% stake in Hafslund’s current Production business.
"We are forming a strong partnership with the City of Oslo in areas where we can combine competences to drive innovation for a greener Oslo, one of Europe’s fastest growing urban areas," says Pekka Lundmark, Fortum’s president and CEO.
When it comes to power generation, Hafslund operates hydroelectric facilities, including four large plants and four smaller, run-of-river sites in Andelva in Eidsvoll municipality. The combined installed capacity of the company’s power plants amounts to 560 MW.
All of the above-mentioned transactions are pending clearance by the Oslo City Council along with certain regulatory approvals. They are expected to close during the third quarter of 2017.