Dong Energy to sell gas distribution business in Denmark for $351m

Dong Energy has signed an agreement to sell its 100% ownership stake in gas distribution business in Denmark and related operational activities to Energinet.dk for kr2.3bn ($351m).

The company’s sale of Dong Gas Distribution is part of the political agreement regarding its initial public offering.

Dong Gas Distribution is expected to result in a gain from sale of enterprises of kr1.5bn ($229m).

The EBITDA contribution from DONG Gas Distribution stood at kr360m ($55m) in 2015.

The companies will also sign an agreement, under which services are provided for an agreed period post-closing.

Dong Gas Distribution will transport gas to about 122,000 customers in Southern Jutland, as well as Western and Southern Zealand.

Energinet.dk owns and operates in advance the overall gas network and will operate distribution networks in Southern Jutland.

Energinet.dk CEO Peder Østermark Andreasen said: "We have several times previously acquired assets from Dong Energy."

Energinet.dk said in a statement: "Politicians have decided that the prices of Energinet.dk’s future gasdistributionsydelse must not rise as a result of the deal, and Energinet.dk will also follow the same regulation on tariffs that Dong Gas Distribution follows today."

The transaction is subject to approval by the Ministry of Finance, Ministry of Energy, Utilities and Climate and competition authorities.

Upon closing of the transaction in September 2016, the company will transfer 97 employees to Energinet.dk.