Equinor Buys Danish Trader
Norwegian major Equinor (formerly Statoil) said July 6 it is buying Danish energy trading company Danske Commodities (DC) for €400mn ($470mn), with smaller contingent payments depending on the latter's performance over the next couple of years.
This 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 TWh of electricity in 37 countries, double Norway’s annual electricity demand; and 389 TWh of gas across 18 countries, equivalent to around one third of total Norwegian gas production. It executes more than 4000 trades and processes around 173 terabytes of data every day, 24 hours a day, 365 days a year.
The transaction supports Equinor’s move from being an upstream oil and gas company to becoming a broad energy company. Equinor said it is 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. It adds that the transaction will enable both Equinor and DC to create value along the full electricity value chain and provide DC with a partner that supports their growth plans.
“Danske Commodities’ trading platform and geographic footprint will support our strategy through leveraging DC’s material trading position in electricity and natural gas. Their success has been due to their agility, entrepreneurialism and speed to market. We look forward to welcoming their talented workforce to the Equinor group,” Equinor said. “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. We see excellent opportunities to develop our collective understanding of various national markets in a world where renewables to a larger and larger degree will be exposed to market risk.”
Danske Commodities’ CEO Henrik Lind will continue to lead the business for at least 12 months after the transaction closes; senior management will remain in place, ensuring continuity for all parties.
“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 optimised 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,” said Lind. Closing is subject to certain conditions, including European Commission approval.
The acquisition echoes UK utility Centrica's roughly $225mn acquisition of Danish short-term electricity trader Neas Energy in 2016.