Vattenfall sells its Berlin heat business to the State of Berlin and grants option to buy GASAG shares

Vattenfall has finalised the strategic review of its Berlin heat business and has decided to sell the entire district heating business to the State of Berlin. An agreement was signed by both parties today. In addition, the State has been granted an option to purchase Vattenfall's shares in GASAG AG, independent of the sale of the heat business. 

"When we announced the strategic review in May 2022, Vattenfall already emphasised that, in the event of a sale, we would only sell to an investor that would continue the Berlin energy transition and our German heat business in line with our decarbonisation ambitions. Another premise was that the new owner is a reliable and fair employer. Both are a given with the state of Berlin as the buyer,” says Anna Borg, President and CEO of Vattenfall.

Currently a purchase price based on equity value is expected at approximately EUR 1.6 billion. The basis for the purchase price is an enterprise value of just below EUR 2 billion. There will be certain adjustments as per the effective date of 31 December 2023, but these can only finally be determined after the 2023 accounts have been established. The new owner will make additional substantial investments in the coming years, in order to generate 40 percent of the district heating from renewable energy sources by 2030 and to achieve climate neutrality by 2045. With the sale, around 1,700 employees of Vattenfall Wärme Berlin AG will move to the new owner. Vattenfall and the State of Berlin plan to close the transaction in the second quarter of 2024. After closing further employees from central functions such as human resources and finance will be transferred. The sale is still subject to the approval of the Berlin parliament and merger control clearance by the Federal Cartel Office.   

"For Vattenfall, the sale marks the end of our district heating activities in Germany, but we will continue to be an important player in the German energy transition. We will fully focus our human and financial resources on enabling our suppliers, our partners and our more than five million customers to live fossil-free lives and thus create security for a better future," adds Christian Barthélémy, Country Manager Vattenfall Germany.      

In addition to the rapidly growing customer business, Vattenfall has for many years been the market leader in Germany in the generation of fossil free electricity from hydropower, has concentrated its continental European wholesale activities in Germany and will continue to invest heavily in solar as well as onshore and offshore wind. "Germany remains a core market for Vattenfall. We are for example currently planning another large wind farm in the North Sea with the same capacity as a nuclear power plant. The Nordlicht cluster will produce wind power from 2027/2028, equal to the electricity consumption of 1.6 million German households," emphasises Anna Borg.

Background 

Vattenfall’s heat business in Berlin employs about 1,700 people and supplies hot water and heating to about 1.4 million residential units. It owns and operates 10 large-scale combined heat and power plants (CHP) as well 105 small block-type thermal power plants and various other facilities. The heat network has a total length of over 2,000 km. 

The sale relates to the entire heating business in Berlin, including the subsidiaries of Vattenfall Wärme Berlin AG. The object of the sale is therefore all shares (100%) in Vattenfall Wärme Berlin AG, including, among others, the shareholding in Fernheizwerk Neukölln AG, Berlin (80.80%) and the 100% shares in Vattenfall Energy Solutions GmbH and Energy Crops GmbH.   

At the same time as the sale of the heating business - but otherwise completely independent of it - the State of Berlin was granted an option to purchase Vattenfall's shares in GASAG AG. Like Engie, Vattenfall holds 31.575% of the shares, E.ON has 36.85%. GASAG operates the Berlin gas distribution networks as well as networks in neighbouring Brandenburg and is the major regional supplier of natural gas both to industry and residential customers. 

For further information, please contact: 
Johan Sennerö, Vattenfall Media Relations, +46 73 046 40 45, johan.senneroe@vattenfall.com 

Stefan Müller, Vattenfall Media Relations Germany, +49 17 526 546 62, stefan.mueller@vattenfall.de

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