Danish energy company Orsted, in which the state has a 50.1% interest, said that the government has withdrawn political support for the company’s continuing divestment of power distribution and residential customer businesses.
Image: Denmark withdraws political support for Orsted divestment process. Photo: Courtesy of Anna Jiménez Calaf on Unsplash.
Orsted announced on 26 June 2018, that it has launched a divestment process for the power distribution business, residential customer business for power and gas and the city light business.
It said that even though these businesses have a high customer satisfaction, they are likely to have lesser strategic and financial importance in the future owing to the company’s international growth in the green energy segment.
These businesses accounted for 5.6% of the company’s total operating profit in 2017.
After discussions with the Danish government, the company’s board decided on 26 June 2018, to initiate a structured divestment process to find a new owner for these businesses.
The company said that the transaction was intended to achieve a good price and satisfactory terms of sale as well as a buyer who would carry on the business responsibly.
It said that the criteria are based on international guidelines for responsible business operations, including tax legislation, international sanctions, money laundering legislation and anti-corruption legislation.
The board expected to decide on the divestment before the end of the first half of 2019 with support from the shareholders.
A small group of potential buyers, covering only pension funds and utility companies from Denmark and Western OECD countries, met the criteria.
Italy’s Enel and Danish utility SEAS-NVE were reportedly among the bidders.
However, the Danish Ministry of Finance informed Orsted that the government will no longer provide political support for continuing the divestment process.
Even then, Orsted said that it will be in the best interest of the company, the shareholders and the customers if the ownership of these businesses is transferred to another company.
Orsted said that the company’s board will assess the situation and discuss the next steps, and affirmed that the announcement does not change its outlook for the 2018 financial year.