Fortum, a Finnish energy company, has agreed to sell its electricity distribution business in Finland to Suomi Power Networks Oy, a consortium led by international infrastructure investors First State Investments (40%) through First State European Diversified Infrastructure Fund and Borealis Infrastructure (40%) and completed by Finnish pension funds Keva (12.5%) and LocalTapiola Pension (7.5%).
The total consideration is €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 €1.8-1.9 billion corresponding to approximately €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 electricity distribution business has 640,000 distribution customers. The company said they will not be affected.
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 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%.