Ørsted to divest domestic utility business to focus on renewable energy
Energy company SEAS-NVE has entered into an agreement with Denmark-based Ørsted to acquire the latter’s domestic power distribution (Radius), residential customer and City Light businesses for a cash consideration of DKK21.3 billion (US$3.2bn).
The proceeds from divestiture of businesses will help Ørsted to continue its global investments in green energy.
Radius with around one million power customers in the Copenhagen area, North Zealand, and parts of central Zealand supplies power through approximately 19,000km grid.
With approximately 44,000 heat customers, the residential customer business sells gas to approximately 105,000 customers and electricity to approximately 717,000 customers while the City Light business operates approximately 145,000 street lights in 15 municipalities on Zealand.
Ørsted to sell domestic utility business to focus on renewable energy
Henrik Poulsen – CEO and president of Ørsted said: “With Ørsted’s global expansion in renewable energy, we’re no longer the right owner of Radius and the Danish residential customer and City Light businesses.
“The agreement [with SEAS-NVE] ensures an attractive transaction for Ørsted’s shareholders and provides a good future home for the customers and for our highly skilled employees.
“We’ll use the proceeds from the divestment to continue our global investments in green energy.”
Ørsted said three businesses accounted for 7.9% (DKK 0.7bn) of the company’s operating profit (EBITDA) and 9.4% (DKK 8.6bn) of its capital employed in H1 2019.
SEAS-NVE will absorb approximately 750 employees of Radius and the Danish residential customer and City Light businesses.
Ørsted expects to gain DKK11-12 billion through the divestiture of enterprises (not part of EBITDA) depending on capital employed at the closing of the transaction.
The transaction is expected to close in the first half of 2020, subject to regulatory approvals by the competition authorities and the Danish Energy Agency.
SEAS-NVE, a cooperatively-owned energy company, has 978 employees and generated 2018 revenues of DKK7.3 billion while Ørsted with 6,300 employees generated revenue of DKK76.9 billion in 2018.