Vattenfall buys Dutch energy company

Sweden’s state-owned power company Vattenfall announced Monday it has offered €8.5 billion ($10.9 billion) for Netherlands-based Nuon in a deal that would “create a leading European energy company”.

Vattenfall buys Dutch energy company

“Dutch Nuon and Swedish Vattenfall today announced they will join forces to form a leading European energy company,” the Swedish company said in a statement.

“Vattenfall has made an all cash offer of €8.5 billion enterprise value for 100 percent of the shares,” it said.

Vattenfall said it would initially acquire 49 percent of Nuon’s shares and would purchase the remaining 51 percent “in the coming six years under fixed terms.”

Nuon’s grid company Alliander was not included in the deal, which has already been unanimously recommended by Nuon’s board and should close by the second quarter of this year.

Vattenfall said the merger with the Dutch company would allow it to achieve “climate neutral” operations by 2050.

“Nuon’s widely respected knowledge in renewables and clean energy technologies is a very valuable addition to our own. It will accelerate the realization of Vattenfall’s strategy to make electricity clean,” Vattenfall chief executive Lars Josefsson said in the statement.

The Swedish company makes 80 percent of its sales in Sweden, Germany and Poland and currently produces 46 percent of its electricity from fossil fuels, 26 percent from nuclear power, 24 percent from hydroelectric power and one percent from wind.

In 2008, Vattenfall posted a net profit of 17.1 billion kronor ($2.0 billion), down from 19.8 billion a year earlier, on sales of 164.5 billion kronor.

Nuon, which counts more than 10,000 employees across the Netherlands, Belgium and Germany, meanwhile reported sales of €6.1 billion last year.

It is the second energy group in the country to be bought up by a foreign firm in just a few weeks.

In January, Germany’s second largest energy group RWE announced it would acquire its largest Dutch counterpart Essent for €9.3 billion.


Swedish energy firm racks up giant losses

UPDATED: Swedish energy giant Vattenfall recorded losses amounting to nearly 29 billion kronor ($3.4 billion) on Tuesday as the company continued its battle against increasingly tough market conditions.

Swedish energy firm racks up giant losses
Vattenfall chief executive Magnus Hall on Tuesday. Photo: Fredrik Persson/TT

Hit by asset write-down charges worth 36 billion kronor, Sweden's Vattenfall reported a net loss of 28.812 billion kronor in the second quarter of the year, a huge drop from 2.3 billion kronor in the same period in 2014.

The state-owned energy firm, a major provider of electricity in northern Europe, has been struggling to improve profits for several years, suffering from weak demand and plunging electricity prices.

It attributed 17 billion kronor of the total asset write-downs to the same fall in profits which led to a shock announcement earlier this year that it planned to close Ringhals 1 and 2 in south-western Sweden.

It said at the time that the two reactors were too costly to keep in production until 2025 as previously planned.

“This is of course very negative but unfortunately reflects the reality we're living in,” said its chief executive Magnus Hall in a statement on Tuesday morning.

It also wrote down an additional 15 billion kronor on its lignite, or brown coal, assets in Germany.

Earlier this year Vattenfall announced that 1,000 workers were being let go as part of a series of bids to curb losses, including speeding up the sale of the German plants.

It reported a total turnover of 36.1 billion kronor in the second quarter of 2015 on Tuesday, down from 36.6 billion in the same period last year.

Hall said that the work to tighten the belt was continuing “to identify further reductions in costs”.

Since the Vattenfall Group bought energy giant Nuon in 2009, a deal which has been hotly debated in Sweden, the firm's assets have been written down by over 52 billion kronor. 

Many energy providers in Europe have made huge asset write-downs in the last two years because of weak demand for electricity against a background of sluggish economic activity.

They have also been caught out by the US shale energy boom, which has pushed down the price of coal for power generation, undermining the profitability of new gas-powered plants and some investment programmes.

Vattenfall employs more than 30,000 and has operations in Sweden, Finland, Denmark, Germany, the Netherlands and Britain.