Norwegian Prime Minister: Fortum acquisition of Hafslund will be prevented

Deal may not have majority backing in City Council

Kjell Magne Bondevik

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Fortum may not be able to acquire a majority holding in Norwegian power company Hafslund. Norwegian Prime Minister Kjell Magne Bondevik stated on Monday that the deal is not backed by a majority in the Oslo City Council, which must still approve the sale of the city's shares to Fortum.
      The Oslo City Board and Fortum have signed an agreement through which Fortum would buy the city's holding of 53.7 percent in Hafslund for 660 million euros. The Oslo City Council is due to decide on the issue on Wednesday next week.
      The crucial votes may come from the Christian Democratic Party, of which Prime Minister Bondevik is also a representative. Two of the party's councillors have expressed critical views regarding the deal.
      According to Bondevik, the decision will be made on a municipal level, and the Norwegian government has no intention of interfering in the process.
      The value of the deal is not the main topic of debate. The Norwegians are keen to keep their hydroelectric companies in domestic hands.
     
Mikael Lilius, the President and CEO of Fortum, has not admitted defeat, but concedes that the outcome of the vote will be extremely tight. Lilius also explained that the discussion in Norway has focused on the role in society of energy companies and the ownership of hydroelectric facilities.
      According to Lilius, Fortum has no means to affect the outcome of the vote anymore. "We have done our share. The rest is politics."
      Fortum currently holds 34 percent of the outstanding Hafslund shares. The Finnish energy giant tried to acquire the City of Oslo's shares already one year ago, but the deal was thrown out by the City Council.
      Finnish bank Sampo met with similar difficulties a couple of years ago when attempting to acquire Norwegian insurer Storebrand. Widespread opposition to the arrival of a foreign owner thwarted Sampo's plans.
      Bondevik, who arrived in Finland on Monday night to meet with Prime Minister Matti Vanhanen, does not believe that the likely toppling of the Fortum deal will affect Finnish-Norwegian business relations negatively.


Previously in HS International Edition:
  Fortum to become leading retail electricity company in Nordic region (11.5.2004)

Links:
  Fortum home page

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