An energy company from Norway is heavily investing in an offshore wind developer in Denmark.
To achieve a 9.8% stake in Orsted, Equinor invested $2.5 billion to expand its renewable energy portfolio, even after the wind developer's 69% freefall of shares since 2021. The company, however, noted that it's not a matter of business operations but due to rising costs and frequent turbine issues.
To explain their investment, Equinor shared to Reuters that it is considered their long-term investment in the sector. With this acquisition, Equinor can access 1 gigawatt of renewable energy, equal to building new products without financial risks associated with construction.
The acquisition news boosted Orsted's shares to 8%, with Equinor's dropping by 3.3%.
Equinor's Stake in Orsted
For Equinor, their minority stake will stay as it is for a long time. According to Offshore Wind Biz, the Norwegian energy supplier has no plans to increase its stake beyond 10% or seek a seat on the board.
Analysts believe it's due to current challenges in offshore wind. However, CEO Anders Opedal believes in its role in the energy transition, even as inflation has caused increased costs and further delays.
With this acquisition, Equinor snatches the second place of being the largest shareholder in Orsted, after the Danish government itself.
A similar Reuters report explained that the offshore wind developer company is enjoying a "strong political support" in Denmark as the state currently has over 50% ownership. The billions of dollars this majority stake cost came from Goldman Sachs as the Danish government's strategic investor.
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