Finland’s clean energy provider Fortum (HEL: FUM1V) agreed to acquire an 81% stake in Ekokem Corp. from its four major shareholders, for EUR 470 million ($523 million). Ekokom’s four biggest shareholders are the Finnish State (34.1%), the Association of Finnish Local and Regional Authorities (21.4%), Ilmarinen Mutual Pension Insurance Co. (15.4%) and the Helsinki Region Environmental Services Authority HSY (10.5%).
Fortum will also make a tender offer to all remaining shareholders at the same price (EUR 165 per share). The company expects to conclude the transactions during the third quarter of 2016, subect to competition authority clearances in Finland and in Sweden.
Ekokem is a leading Nordic circular economy company specialized in material and waste recycling, final disposal solutions, soil remediation and environmental construction. The company has a strong position especially in treatment of hazardous waste. Ekokem serves both industrial and municipal customers from its facilities in Finland, Sweden and Denmark. The main revenue sources comprise of waste and environmental services, as well as revenues from the sales of power, recycled materials and heat.
In 2015, Ekokem’s net sales totalled EUR 258 million and reported EBITDA EUR 55 million. The group employs approximately 630 skilled professionals in Finland, Sweden and Denmark. In January 2015, Ekokem acquired the Danish environmental management company NORD.
Based on Fortum’s estimate for 2016, the purchase price would correspond to approximately 11 times EBITDA. The acquisition will generate a positive operative result and cash flow for Fortum from the beginning, the company says. The acquisition will diversify Fortum’s earnings structure as Ekokem generates most of its result from other sources than the Nordic power price.
“Ekokem is a first-class company with experienced management and personnel. Supported by Fortum’s competence in waste-to-energy and strong financial resources, a true Nordic circular economy champion will be formed. We see excellent international growth opportunities for the business and intend to
invest in the further development of Ekokem’s solutions,” says Pekka Lundmark, Fortum’s president and CEO.
“The board of Ekokem initiated a review of the capital structure in the beginning of the year, with the target to secure sufficient resources to enable the fulfillment of the company’s strategy and continued growth. I believe this goal will be fulfilled as a part of Fortum, and that it secures the continued success of Ekokem. With Fortum’s network and resources we will be able to expand Ekokem’s services more broadly internationally in the future. I believe Fortum’s circular economy strategy will be developed based on the Ekokem platform,” says Karri Kaitue, Ekokem’s CEO.
Fortum’s vision is to be the forerunner in clean energy. The company is a provider of electricity, heat and cooling, as well as other energy solutions. Already 64% of its electricity generation is CO2 free. its main markets are the Nordic and the Baltic countries, Russia, Poland and India. In 2015, Fortum employed nearly 8,000 professionals, and its sales were EUR 3.5 billion. the company is based in Helsinki, Finland. Fortum’s shares are listed on Nasdaq Helsinki.