Equinor Buys 9.8% Stake in Orsted as Part of Renewables Push — Update

By Dominic Chopping

Equinor has acquired a 9.8% stake in Danish wind energy producer Orsted as it looks to ramp up its exposure to renewable energy generation.

The company has built its position in Orsted over time, through market purchases and a block trade, and it said that based on Orsted's closing share price on Friday its stake was valued at $2.5 billion.

The move comes as Equinor plans to allocate more than 50% of its investments in renewable and low-carbon projects by 2050, with around 20% of investments in these areas in 2023. The deal will contribute to its energy transition plan that includes delivering energy with progressively lower emissions by boosting renewable energy capacity.

Orsted has transformed itself in recent years from Denmark's small state oil company into a global giant in wind energy development, but last year hit major headwinds as it pushed aggressively to expand into new markets, particularly the U.S.

After struggling with supply-chain bottlenecks, higher interest rates and trouble getting tax credits, it said late last year it would pull out of two high-profile U.S. offshore wind projects due to spiraling costs. It launched a comprehensive restructuring earlier this year to right itself from the costly move into the U.S. offshore wind market that includes cost cuts, paused dividend payments over several years, asset sales and a refocusing of business priorities.

"The offshore wind industry is currently facing a set of challenges, but we remain confident in the long-term outlook for the sector, and the crucial role offshore wind will play in the energy transition," Equinor Chief Executive Anders Opedal said.

The acquisition sees Equinor become Orsted's second largest shareholder, after the Danish State, which holds a controlling stake in the company. Equinor said that it hopes to increase its holding to 10%, but beyond that has no plans to increase the stake further.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

October 07, 2024 07:10 ET (11:10 GMT)

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