OSLO, Norway (AP) -- Norwegian conglomerate Orkla ASA announced Tuesday it will sell almost all its Elkem unit to chemical group China National BlueStar Corp. for nearly $2 billion.
The deal, which also covers a major power contract that Orkla bought last year, includes Elkem Silicon Materials, Elkem Foundry Products, Elkem Carbon and Elkem Solar. However, Orkla said it will continue to own Elkem Energi AS.
A silicon and carbon parts maker, Elkem specializes in components for solar panels. It also is involved in energy production in Norway and has 2,500 employees. In reported revenues of $1.2 billion in 2009.
Orkla CEO Bjoern M. Wiggen said BlueStar will provide Elkem an owner "that has the best attributes to take advantage of the potential of Elkem's technological strength and competence," with solid finances and already well positioned in the metals and renewables sector.
BlueStar Chairman, Ren Jianxin, said the deal will benefit both groups, with Elkem getting access to Asia and the Chinese market and BlueStar profiting from the Norwegian company's management experience and technology.
"We strongly believe in the huge potential for Elkem's new solar-grade technology with its leading energy efficiency and environmental safety characteristics," he said.
Orkla said the sale will not greatly change Elkem's main structure or the way it operates its existing plants.
The deal is subject to regulatory approvals and is expected to be completed in the first half of this year.
Kenneth Sivertsen, an analyst with Arctic Securities in Norway, said the deal helps the Chinese company acquire technology as well as cheaper energy thanks to the power contract that was included. "I'm pretty sure the jobs will stay in Norway though," he said.
Shares in the Oslo-headquartered group fell 1.7 percent to 56.40 ($9.42) kroner shortly after opening on the Oslo stock exchange.
At a news conference, Orkla CEO Wiggen said the divestment is in line with earlier announced plans to trim operations and concentrate on key businesses. "We have become a very broad group and we think it's now the time to focus on fewer areas than what we have had in the past five years," he said.
Wiggen also gave a hint of what his company intends to do with the proceeds of the sale, saying parts of it will be used to reduce its net interest-bearing debt, as well as more investments into its "main fields of industrial interest," specifically in its Orkla Brands division as well as its aluminum solutions unit Sapa.