(Bloomberg) — Finnish utility Fortum Oyj is divesting its stake in Norway’s largest producer of district heating and the City of Oslo is transferring its holding in a deal valuing the company at 20 billion kroner ($2.3 billion).
Fortum has over the past few years divested more than $5.5 billion worth of stakes in both grids and heating companies from Sweden to the Baltics as it seeks to become a leader in Europe’s energy transition together with German subsidiary Uniper SE. The company is expanding in wind as well as other low-carbon production assets.
The buyers of Fortum Oslo Varme AS are an investor consortium specializing in energy and infrastructure. The group includes Hafslund Eco AS, a company owned by the City of Oslo, which will hold 60% of the company following the transaction. Infranode Holding AB and HitecVision AS will each own 20%, Hafslund Eco said in a statement on Tuesday. Fortum’s 50% stake is worth about $1.1 billion on a cash and debt free basis.
“It is of best interest of Fortum Oslo Varme to continue its good development under the new ownership known for its sustainable hydropower and long-term investments in infrastructure in Northern Europe,” Fortum Chief Executive Officer Markus Rauramo said in a statement. The buyers had made the initial approach, he said.
The transaction requires approval by the Oslo City Council and Norwegian Competition Authority, and is seen closing in the second quarter. Fortum expects to book a tax-exempt capital gain of about 600 million euros in the City Solutions segment’s results in connection with closing, the utility said.
As part of the transaction, Fortum will deconsolidate a related 2 billion-krone loan from the City of Oslo.
Fortum shares rose 1.2% in Helsinki. They’re down almost a third this year.
(Updates with Fortum CEO comment in fourth paragraph)
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