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Fortum and City of Oslo restructure ownership in Hafslund and announce partnership

Fortum Oy and the City of Oslo, Norway have entered into an agreement to restructure their ownership in Hafslund ASA.

The Klemetsrudanlegget AS (KEA) waste-to-energy (WTE) plant in Oslo, Norway is also a contender for Norway’s carbon capture and storage (CCS) pilot programme (photo courtesy ZERO).

The Klemetsrudanlegget AS (KEA) waste-to-energy (WTE) plant in Oslo, Norway is also a contender for Norway’s carbon capture and storage (CCS) pilot programme (photo courtesy ZERO).

Finland-headed energy major Fortum Oy and the City of Oslo, Norway have entered into an agreement to restructure their ownership in Hafslund ASA, one of the largest listed power groups in the Nordic region. Hafslund is a pure-play energy and infrastructure company with a leading position as Norway’s largest networks, district heating, and power sales company, and is a medium-sized power producer.

The transactions are subject to approval by the Oslo City Council (Bystyret), the necessary regulatory approvals and fulfillment of the customary closing conditions. The closing of the transactions is expected during the third quarter of 2017.

– We are very pleased to have Fortum as our industrial partner in district heating and cooling and waste-to-energy. Together we will better be able to develop new technologies for sustainable and smart solutions for Oslo and its inhabitants, said Raymond Johansen, Governing Mayor of Oslo in a statement.

Green partnership

According to the statement, Fortum will sell its 34.1percent stake in Hafslund ASA to the City of Oslo for approximately EUR 730 million before the proposed dividend for the Annual General Meeting 2017. Fortum will book a one-time tax-free sales gain totaling approximately EUR 330 million, which corresponds to EUR 0.37 earnings per share. The final gain will be determined at the closing of all transactions and will be reported in Fortum’s Other segment.

Fortum will acquire 100 percent of Hafslund’s current markets business area, which operates in Norway, Sweden, and Finland. This will almost double Fortum’s number of electricity retail customers in the Nordics – from 1.3 million to 2.4 million.

– In electricity retail, the combination of Hafslund and Fortum will have significant scale benefits, which will enhance the development of new technologies and services for customers. The proposed transactions support Fortum’s strategic growth and cash flow ambitions. We are naturally very excited to be able to develop sustainable solutions for yet another major European city. Our strategy implementation will continue and we still have significant financial headroom available for market consolidation, Pekka Lundmark President and CEO of Fortum.

Hafslund’s Heat business area and the City of Oslo’s waste-to-energy company Klemetsrudanlegget AS (KEA) will be combined into one company, forming an integrated value chain in the waste-to-energy system. Fortum will acquire 50 percent of the combined company.

The combined entity will be owned 50/50 by Fortum and the City of Oslo, with Fortum having operational responsibility. Heat and KEA will be consolidated as a subsidiary to Fortum, with a 50 percent minority interest. In addition, Fortum will acquire 10 percent of Hafslund’s current Production business area.

– We are forming a strong partnership with the City of Oslo in areas where we can combine competencies to drive innovation for a greener Oslo, one of Europe’s fastest growing urban areas. At the same time, we want to enable people and businesses to make more environmentally friendly choices. KEA is also a contender for Norway’s carbon capture and storage pilot programme, and I believe that together with Fortum, its position will be stronger, ended Lundmark.

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