Fortum Sells Last Power Distribution Unit to Focus on GenerationPeter Levring
Fortum Oyj sold the last of its electricity distribution businesses for $7 billion as the Finnish utility focuses on heat and power generation.
Three Swedish pension funds and Borealis Infrastructure Management Inc., an arm of the Ontario Municipal Employees Retirement System, agreed to buy Fortum’s Swedish distribution company for 60.6 billion kronor on a debt and cash-free basis. Fortum said it will book a one-time gain of 4.4 billion euros ($4.6 billion). The Espoo-based company also raised its long-term financial targets.
After selling the unit “Fortum will concentrate on the growth and development of our core businesses,” the company said in a statement on Friday. Those include CO2-free hydro and nuclear power generation and efficient combined-heat and power production.
Fortum said it will book a one-time gain of about 5 euros a share in the second quarter, when the transaction is completed.
Infrastructure assets such as power grids, pipelines and water systems are increasingly drawing attention from pension funds and other investors thanks to their stable, predictable earnings. Fortum agreed in 2013 to sell its Finnish grid to Borealis for about $3.5 billion.