Norsk Hydro ASA has entered into an agreement with Oslo Pensjonsforsikring AS regarding the sale of Herøya Industripark AS. The transfer will likely occur during the first quarter of 2016.
"After a thorough process, and based on an overall assessment, we concluded that Oslo Pensjonsforsikring AS (OPF) would be the best new owner of Herøya Industripark. We see them as a long-term and very serious owner. Oslo Pensjonsforsikring already has a diverse portfolio of real estate, including industrial operations, and has broad experience in property management," says Executive Vice President Eivind Kallevik in Hydro.
Almost a year ago, Hydro announced the decision to offer the industrial park in Herøya for sale, a consequence of changes Hydro has undergone in recent years.
Hydro has developed from a conglomerate operating in several business sectors to a pure aluminium company with its own significant electric power production. The company no longer has any production facilities at Herøya, but there are about 80 companies with 2 500 employees at this location, which for many decades was Hydro's largest production site. The biggest organizations in Herøya include Yara, Inovyns and RHI Normag.
A number of Norwegian and international stakeholders have considered buying Herøya Industripark, and negotiations with several bidders have been ongoing since June.
Oslo Pensjonsforsikring AS is a life insurance company wholly owned by the Municipality of Oslo. The company manages the pension plans in the municipality, including municipal corporations and corporations where Oslo is the majority owner. In addition, the pension plans cover those who were employed at the municipal hospitals of Oslo, when the federal government took over ownership in 2002. OPF has total assets of NOK 78 billion.
"As a life insurance company and asset manager, OPF is interested in assets that provide good long-term returns. We believe Herøya Industripark is a good addition to our portfolio and look forward to taking part in the ownership and development of one of the core areas for the onshore processing industry in Norway," says Investment Director Kjetil Houg in OPF.
He says that OPF plans to further develop Herøya Industripark's philosophy as host organization in cooperation with the employees.
The transaction is expected to give Hydro a book gain of approximately NOK 350 million. The formal transfer will likely occur during the first quarter of 2016. OPF has received the necessary approvals from the Financial Supervisory Authority to complete the transaction, but it must also be formally approved by the competition authorities.
The 16 Hydro employees directly affected by the sale will be transferred, after the sale is completed, to a property management company that will be responsible for the daily operation and further development of Herøya Industripark.
In addition to OPF, the property management company will collaborate with other owners having solid experience in real estate development and management of industrial and business parks in Norway. FG Eiendom is expected to assume a central role as partner of the property management company.
FG Eiendom is a real estate company that develops and manages commercial, residential and retail properties across the country. They have local roots in Kristiansund and are currently involved in Kristiansund, Vikan, Raufoss and Oslo Business Park.
The sale of Herøya Industripark AS does not include the power distribution grid, which will continue to be operated by Hydro's wholly owned subsidiary Herøya Nett AS. Hydro is in discussions with potential interested parties regarding the acquisition of this company.
Industrial activity began in Herøya in 1929 with the establishment of the Eidanger saltpeter factory. Fertilizer production was based on ammonia from Rjukan. The facilities were gradually expanded, first with the increased production of fertilizer and its by-products, and later with the production of PVC and magnesium.
At the peak in the 1960s, Hydro employed around 6 500 people in Herøya. Fertilizer production, which played such an important role in Hydro's history, went over to Yara when it was spun off from Hydro in 2004, while the petrochemical business was sold to Ineos in 2008.