OSLO: Fjordkraft Holding ASA has entered into an agreement for the acquisition of 100% of the shares in Troms Kraft Strøm AS and its subsidiary Switch Nordic Green AB, from the current owner Troms Kraft AS.

Key information about Switch Nordic Green (SNG):

• SNG is a Nordic electricity retailer with operations in both Sweden and Finland, around 60 employees and their headquarter is located in Stockholm, Sweden.
• SNG had a total number of electricity deliveries of 167 thousand as per 31 August 2020, of which 100 thousand in Finland and 67 thousand in Sweden. 27 thousand of the consumer deliveries in Sweden are through a 3rd party agent.
• The deliveries are split 78/22 between the Consumer and Business segment.
• SNG has an estimated market share of 2.8% in Finland and 1.2% in Sweden.
• 2019 EBIT for SNG was SEK 52m, and underlying EBIT (ex. Covid-19 effects) is estimated to SEK ~50m.

Strategic rationale:

• The acquisition positions Fjordkraft for further growth in the Nordics, as the markets become more similar and competition becomes increasingly pan-Nordic. The presence of tech spin off Metzum AS, through its subsidiary Metzum AB, also supports further Nordic expansion.
• Increased attractivity in the pan-Nordic business segment and potential for increased sale of value added services.
• Switch Nordic Green, with its brand Nordic Green Energy, is perceived as a green and renewable focused supplier – a good basis for further growth and a strong match with Fjordkraft’s brand position.
• Professional and experienced management with detailed knowledge of the Swedish and Finnish market.

The key terms of the Transaction are as follows:

• The Transaction will be structured as an acquisition of all shares in the Target by the Company, from Troms Kraft AS (the “Seller”). Other non-SNG related assets will be taken over by Seller in advance of closing, so that Target’s only material asset at the time of closing is the shares in SNG.
• The purchase price is based on an enterprise value of the Target of NOK 375 million on a cash and debt free basis and assuming an agreed normalised level of working capital. In addition to the enterprise value of NOK 375 million, there are tax losses carried forward in the Target and its subsidiary. The value of the tax losses carried forward and the final purchase price will be decided through SNG’s tax assessment for 2020. The purchase price payable for the shares will follow a typical ´locked box´ mechanism, and will be finally calculated based on a set of audited accounts for the Target to be established as per 31 August 2020. An interest will accrue on the purchase price payable in cash from 31 August 2020 until closing of the Transaction.
• The purchase price shall be paid in cash by the Company to Troms Kraft AS. The acquisition is expected to be financed by long-term debt through Fjordkraft’s existing available facilities and available cash. The completion of the Transaction is not subject to financing.
• The Seller bear all risk and cost associated with any ongoing conflict or dispute.
• Completion is subject to certain customary closing conditions for transactions of this type, including completion of the pre-closing reorganisation of Target by transfer of assets.
• Closing of the Transaction is expected to take place in November 2020, subject to satisfaction of the closing conditions.