Norwegian oil and gas company Equinor has reached an agreement to buy 100% of shares in Danish energy trading company Danske Commodities (DC) for EUR 400 million ($468.3 million).
Equinor said on Friday that the acquisition included smaller contingent payments depending on DC’s performance over the next couple of years.
The closing of the acquisition is subject to certain conditions, including European Commission approval.
The company added that the acquisition of one of Europe’s largest short-term electricity traders supports Equinor’s development towards becoming a broad energy company. DC is also active in short-term gas trading and provides energy market services.
DC was founded in 2004 and is based in Aarhus, Denmark, with 284 employees. In 2017 it traded 318 terawatt-hours of electricity across 37 countries, equal to more than two times Norway’s annual electricity consumption, and 389 terawatt hours of gas across 18 countries, around one third of total Norwegian gas production.
Becoming a “broad energy company”
Explaining the reasons behind the transaction, Equinor said it supports its move from being an upstream oil and gas company to becoming a broad energy company. The company is also building a material industrial position in profitable renewable energy and expects to invest 15-20% of its capital expenditure in new energy solutions by 2030.
Jens Økland, Equinor’s executive vice president for marketing, midstream, and processing, said: “Danske Commodities’ trading platform and geographic footprint will support our strategy through leveraging DC’s material trading position in electricity and natural gas. We look forward to welcoming their talented workforce to the Equinor group.”
Irene Rummelhoff, Equinor’s executive vice president for new energy solutions, added: “This transaction will strengthen our ability to capture value from our current and future equity production of renewable electricity and supports our aim to grow in new energy solutions.”
Danske Commodities’ CEO Henrik Lind will continue to lead the business for at least 12 months after the transaction closes. Also, the senior management group will remain in place.
Lind said: “Under Equinor’s ownership Danske Commodities will benefit from a stronger financial position and a portfolio of gas and renewable assets across Europe that can be optimized in the short-term dynamic market and give us further trading opportunities. We will have an owner with big ambitions in renewables that can accelerate our ability to scale and make investments, and whose values and people are a strong match and fit with our own.”