Finnish Fortum to Up Stake in German Uniper
Finnish energy group Fortum has struck deals with activist funds Elliott and Knight Vinke to buy more than 20.5% of its German counterpart Uniper for €2.3bn ($2.5bn), raising its ownership to 70.5%.
Fortum has been vying for full control over Uniper for two years, but its advances have been opposed by the German group’s management.
“It has been Fortum’s preference to agree with Uniper on a joint path forward, yet discussions have each time ended short of actions,” Fortum said in a statement on October 8. “Fortum is convinced that this change in Uniper’s ownership structure as well as a resolution of the complex relationship between all parties will return stability and put focus solely on the business and the opportunities available to us.”
Uniper has not commented on the deals.
The transactions should close in the first quarter of 2020, according to Fortum, pending regulatory approvals in Russia and the US. Fortum has already received unconditional clearance to proceed from the European Commission. Securing a greenlight from Russia’s Federal Antimonopoly Service (FAS) could be the biggest hurdle. The competition watchdog has so far blocked Fortum from raising its stake in Uniper above 49.99% because of a strategic water licence held by Uniper's Russian subsidiary.
Fortum did not comment on how it would overcome this obstacle. But it did say it would rule out any domination and profit and loss transfer agreement with Uniper or a squeeze-out – forcing minority shareholders to divest – for at least two years. This was “in the interest of strengthening the basic for a trustful engagement with Uniper and its employees,” it said.
The deal will be funded with Fortum’s existing cash resources as well as credit facilities underwritten by Barclays.
Fortum and Uniper are both major players on the European energy market. Fortum manages heat and power generation, distribution and retail operations primarily in Nordic and Baltic countries and in Russia, India, Poland and the UK. Uniper runs power plants and trades energy across Europe and Russia, and has extensive gas storage operations in Germany, Austria and the UK. It also provides solutions for storing renewable energy.