Fortum Corporation and the City of Stockholm have signed an agreement for Fortum to purchase the City´s 50% interest in Birka Energi AB for a total price of EURO 1.5 billion (SEK 14.5 billion). The City of Stockholm retains a 50% economic interest in Birka Energi’s district heating business (Birka Värme).
The acquisition of Birka Energi consolidates Fortum’s position as one of the leading players in the Nordic electricity market and is a key step in its strategy to expand its core power and heat business. The transaction allows Fortum to combine its own power and heat operations with Birka Energi’s generation assets, customer base and networks and creates potential annual synergies of up to EURO 60 million by 2004. The acquisition is expected to be earnings enhancing in 2003. The strength and strategy of Fortum also enables the further development of Birka Energi to the benefit of customers, employees and owners.
The transaction will be financed through bank credit lines. Fortum plans to maintain the existing financing of Birka Energi and is committed to manage Birka in full recognition of its obligations to bondholders and other lenders.
Fortum intends to accelerate its program of non-core divestitures. In addition to the plans already announced to divest its remaining UK and Irish power assets and its Omani exploration and production assets, Fortum will consider divesting some of its German businesses. Fortum may also seek other financing in the capital markets in due course. These measures are all consistent with Fortum´s strategy of focusing its financial and management resources on the Nordic energy market.
Pro forma figures for the combined group, as well as the full text of the joint press release issued today by Fortum and the City of Stockholm, are attached.
A press conference on the Birka transaction will be held today at 9.30 a.m. in Stockholm, Sweden and at 2.30 p.m. in Espoo, Finland.
Senior Vice President, Corporate Communications
Helsinki Exchanges, Key media
For further information:
Mikael Lilius, President & Chief Executive Officer +358 10 452 9100
Juha Laaksonen, Chief Financial Officer +358 10 452 4519