Fortum - sells its electricity distribution business in Finland to Suomi Power Network
Fortum has agreed to sell its electricity distribution business in Finland to Suomi Power Networks Oy, which is owned by a consortium of Finnish pension funds Keva (12.5%) and LocalTapiola Pension (7.5%) together with international infrastructure investors First State Investments (40%) and Borealis Infrastructure (40%).
The total consideration is EUR 2.55 billion on a debt- and cash-free basis. Fortum expects to complete the divestment process during the first quarter of 2014 subject to the necessary regulatory approvals as well as customary closing conditions. Fortum expects to book a
one-time sales gain of EUR 1.8-1.9 billion corresponding to approximately EUR 2.0 per share in its Electricity Distribution and Sales Division's first quarter 2014 results. A total of 320 employees will transfer with the business at closing with existing terms of employment.
Fortum's decision to divest its electricity distribution business has no effect as such on its approximately 640,000 distribution customers. Upon closing, the customers will transfer with the business with existing terms.
The decision to divest Fortum's electricity distribution business in Finland is linked to the strategic assessment of the company's electricity distribution business' future alternatives. Fortum has published a stock exchange release on the completion of the assessment today, 12 December 2013. Fortum also prepares for a possible sale of the Swedish and Norwegian electricity distribution businesses. The decision to complete the process is dependent on market development and development of national regulation in both countries, among others.
Fortum's electricity distribution business in Finland includes two jointly managed grid companies: Fortum Espoo Distribution Oy, with grids in the city of Espoo and surrounding communities and the city of Joensuu, as well as Fortum Sähkönsiirto Oy, with several grid areas located mainly in southern and western Finland, but also in the north-western part of the country. The combined network length of the companies is 79,000 kilometres delivering approximately 12.6 terawatt-hours of electricity to customers. Fortum's market share of the local electricity distribution in Finland is approximately 20%.
Fortum's corrected Finnish distribution companies' key figures are:
| EUR million |
2012 |
LTM* |
| Sales |
321
|
325 |
| Comparable operating profit |
101 |
94 |
| Comparable EBITDA |
154
|
154 |
| Net assets (at period-end) |
726
|
749
|
| Gross investments |
157 |
142 |
*The last 12 months ending at the end of the third quarter 2013.
"Our electricity distribution business is in very good shape and deserves to be developed further as a core business from its own standpoint. We are pleased to have found a buyer, who has a deep understanding of the social importance of infrastructure assets and is committed to develop reliable networks and services for the customers. This transaction also clearly shows that Finland is an attractive country for investors with a long-term perspective," says Fortum's President and CEO Tapio Kuula.
"We at Fortum can create the best value for our customers, shareholders and the society as a whole in our competed businesses. Our ambition is to grow in accordance with our strategy in low-carbon power generation, energy-efficient combined heat and power (CHP) production and sales as well as in innovative customer offerings," Tapio Kuula summarises.
The consortium team members have more than 40 years combined experience in the acquisition and management of electricity networks. Through their extensive experience, all members share a deep understanding of the social importance of infrastructure assets and are committed to good cooperation with the stakeholders of their investment targets.