Fortum Sells Swedish Grid for $6.9b

State-controlled Finnish utility Fortum on Friday said it has agreed to sell its Swedish power distribution business to Canada's Borealis and Swedish pension funds for about 6.6 billion euros ($6.9 billion).

 

The deal completes Fortum's power grid divestments and follows recent sales of its smaller Finnish and Norwegian distribution businesses, from which the company raised in total 2.9 billion euros.

 

It is also the latest in a series of regulated grid sales made by European energy firms wanting to cut debt and focus on power generation.

 

The buyer consortium comprises from Borealis, the infrastructure investment arm of the pension fund OMERS, as well as Swedish pension funds Forsta AP-Fonden, Tredje AP-Fonden and Folksam.

 

Sources told Reuters last week that the Borealis-led consortium was lining up a final bid for the asset.

 

Fortum expects to book a sales gain of about 4.4 billion euros, or around 5 euros per share, from the deal.

 

"It's a good price, I had expected something around 6 billion euros," said Inderes analyst Antti Viljakainen.

 

Shares in the company fell 1.5 percent at 1558 GMT.

 

Fortum also updated its long-term targets, but kept its target for return on capital employed unchanged at 12 percent, and added that it has a somewhat higher business risk profile after the deal.

 

"That's why the share is falling," Viljakainen said.

 

Fortum said that following the deal it would focus on the growth and development of power generation as well as combined heat and power production.

 

The business had earnings before interest, tax, depreciation and amortisation (EBITDA) of 365 million euros on sales of 634 million last year.

 

It employs about 380 people and distributes electricity to 903,000 customers in Sweden.