Fortum has signed an agreement with the four biggest owners of Ekokem Corporation, representing approximately 81% of the shares, to acquire their shareholding in the company for approximately €470 million (US$522.7 million).
This would correspond to a debt and cash-free purchase price for 100% of the company of approximately €700 million. Based on Fortum’s estimate for 2016, the purchase price would correspond to approximately 11 times EBITDA. In 2015, Ekokem’s net sales totalled €258 million and reported EBITDA €55 million.
The four biggest shareholders of Ekokem are the Finnish State, the Association of Finnish Local and Regional Authorities, Ilmarinen Mutual Pension Insurance Company and the Helsinki Region Environmental Services Authority, HSY.
Ekokem is a leading Nordic circular economy company specialised 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.
The transaction will require competition authority clearances in Finland and in Sweden. Fortum estimates that it will conclude the transactions during the third quarter of 2016. Fortum will also make a tender offer to all remaining shareholders at the same price (€165 per share).
Pekka Lundmark, Fortum's President and CEO, stated:
"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."
Karri Kaitue, Ekokem’s CEO commented:
“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.”