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Nordea, DNB sell Baltic bank stake to Blackstone in $1.2 billion deal

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Staff Writer | September 13, 2018
As part of Nordea’s strategy to focus its operations to the Nordic core markets, Nordea, together with DNB, has entered into an agreement to jointly sell 60 percent of Luminor to a consortium led by private equity funds managed by Blackstone.
Nordea
Acquisition   This is in line with other recent transactions carried out by Nordea
As a result of the transaction, each of Nordea and DNB will hold approx. 20 percent of Luminor and maintain ongoing representation on Luminor’s board of directors. Nordea and Blackstone have additionally entered into a forward sale agreement for the sale of Nordea’s remaining 20 percent stake over the near to medium term.

The decision for Nordea to sell the shares in Luminor is pursuant to Nordea’s overall ambition to simplify and focus its operations to the Nordic core markets and become an even better bank for its customers. This is in line with other recent transactions carried out by Nordea, e.g. the acquisition of Gjensidige Bank in Norway, which is expected to close in the first quarter of 2019.

The transaction is inter alia subject to customary regulatory approvals and is expected to close during H1 2019.

The agreed purchase price in the upfront sale of the approx. 36 percent stake divested by Nordea is EUR 0.6 billion, valuing Luminor, which currently generates a mid-single digit normalised RoE, at approx. EUR 1.7 billion, equivalent to 1.0x P/BV.

The forward sale of Nordea’s remaining 20 percent stake will be carried out at a fixed valuation of 0.9x P/BV.

This corresponds to an estimated blended sales multiple of 0.97x P/BV, excluding transaction costs and other Nordea-related accounting impacts, for the sale of Nordea’s ownership in Luminor. In addition to the upfront sale and forward sale Nordea will continue to provide funding to Luminor over the medium term, together with transitional services until 2020.

On a pro-forma basis and subject to regulatory capital treatment the upfront sale is expected to have a positive impact on Nordea’s Common Equity Tier 1 (“CET1”) ratio of approx. 20bps upon completion of the transaction. Pro-forma for the complete sale of Nordea’s ownership in Luminor under the forward sale agreement and after Luminor has returned its funding to Nordea, the positive impact on Nordea’s CET1 ratio is expected to be approx. 45bps.

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