Fortum - Tender offer

Fortum to acquire Ekokem, a Nordic circular economy company

FORTUM CORPORATION STOCK EXCHANGE RELEASE 27 MAY 2016 at 13:35 EEST


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 EUR 470 million. This would
correspond to a debt and cash-free purchase price for 100% of the company of
approximately EUR 700 million. Based on Fortum’s estimate for 2016, the
purchase price would correspond to approximately 11 times EBITDA. The
acquisition will generate a positive operative result and cash flow for Fortum
from the beginning. The acquisition will diversify Fortum’s earnings structure
as Ekokem generates most of its result from other sources than the Nordic power
price. 

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. 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 (EUR 165 per share). The completion of the offer
will be subject to Fortum obtaining the competition clearances and reaching a
majority ownership in Ekokem. Having reached the necessary ownership
thresholds, Fortum will proceed with a minority redemption process. 

In 2015, Ekokem’s net sales totalled EUR 258 million and reported EBITDA EUR 55
million. Ekokem has approximately 630 employees. 

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. 

"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," says Pekka Lundmark,
Fortum's President and CEO. 

“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,” says Karri Kaitue, Ekokem’s CEO. 

Fortum Corporation
Sophie Jolly
Vice President, Investor Relations and Financial Communications


News conference in Finnish

A press conference (in Finnish) will be held today, 27 May 2016 at 16.00 EEST
at the Scandic Simonkenttä hotel, Simonkatu 9, Helsinki, Finland. The press
conference will be webcasted on Fortum’s Finnish website (www.fortum.com/fi)
and media can also ask questions using the webcast’s chat function. 


Further information:
Pekka Lundmark, President and CEO, Fortum
Markus Rauramo, Executive Vice President, City Solutions, Fortum
Call-back requests: Pauliina Vuosio, Corporate Press Officer, tel. +358 50 453
2383 
Investors, analysts and financial media: Sophie Jolly, Vice President, Investor
Relations and Financial Communications, tel. +358 10 45 32552 


Background information

Ekokem

Ekokem is one of the leading circular economy companies in the Nordics that
provides environmental management and material efficiency services. Ekokem
operates leading facilities for hazardous waste treatment and offers a broad
spectrum of specialized environmental services. The company mission is to
create value by improving their customers material and energy efficiency.
Ekokem offers recycling, reutilisation, and final disposal solutions, as well
as soil remediation and environmental construction services. Ekokem has been
contributing to saving natural resources and promoting the circular economy for
already 35 years. 

The group employs approximately 630 skilled professionals in Finland, Sweden
and Denmark. In January 2015, Ekokem acquired the Danish environmental
management company NORD. 

The group’s key figures for 2015 were

  -- Net sales EUR 258 million
  -- Reported EBITDA EUR 55 million, EBITDA margin was 21.1%
  -- Comparable EBITDA EUR 57 million

The biggest shareholders are the Finnish State (34.1%), the Association of
Finnish Local and Regional Authorities (21.4%), Ilmarinen Mutual Pension
Insurance Company (15.4%) and the Helsinki Region Environmental Services
Authority HSY (10.5%). 

www.ekokem.com



Sustainable city solutions a strategic priority for Fortum

Fortum's new strategy, published on 3 February 2016, targets growth and
continued profitability with a strong focus on clean energy, customers and
shareholder value creation. Fortum's vision is to be the forerunner in clean
energy. One of the strategic cornerstones towards the vision is creating
solutions for sustainable cities. 

Growing cities and urban areas are facing multiple challenges, such as high
emissions from inefficient heating, cooling and electricity production,
increasing amounts of waste, and high traffic pollution and noise. Fortum aims
to use its expertise and experience to help cities solve these challenges
sustainably and to support building a circular economy. Fortum’s solutions
include efficient and reliable district heating and cooling, integrated
electricity retail solutions and related applications, waste-to-energy and
waste treatment, as well as enhancing e-mobility with smart charging solutions
for electric vehicles. In addition, the company sees new revenue opportunities
in various expert services in these areas. 

In solutions for sustainable cities, Fortum targets growth primarily in its
current home markets and also the wider European market. Fortum will also
investigate possibilities in carefully selected urban areas in Asia. 



Fortum

Fortum's vision is to be the forerunner in clean energy. We provide our
customers with electricity, heat and cooling as well as other energy solutions
that improve present and future life. Already 64% of our electricity generation
is CO2 free. Our main markets are the Nordic and the Baltic countries, Russia,
Poland and India. In 2015, we employed some 8,000 energy sector professionals,
and our sales were EUR 3.5 billion. Fortum's share is listed on Nasdaq
Helsinki. www.fortum.com 

Distribution:
Nasdaq Helsinki
Key media
www.fortum.com