Fortum pays $2.5bn to take control of Uniper

Fortum has today agreed to pay €2.3bn ($2.5bn) to increase its stake in European utility Uniper to 70.5 per cent.

Finland-headquartered Fortum had previously held a 49.9 per cent share in Uniper since 2017 and has ever since wanted to increase it to a controlling stake: a move Uniper had previously strongly resisted – to the extent that several top bosses quit this year, including chief executive Klaus Schaefer and finance chief Christoper Delbrueck.

Since then, however, Fortum has said that negotiations with new Uniper chief Andreas Schierenbeck have been very constructive.

Uniper was spun-off from Germany’s EON and operates gas, coal and nuclear plants across Europe.

Under the deal announced today, Fortum will pay approximately €2.3bn for the combined shareholding, corresponding to €29.93 per share. This takes Fortum’s total investment in Uniper to approximately €6.2 billion, representing an average acquisition price of €23.97 per share.

In a statement, Fortum said that it has been its preference “to agree with Uniper on a joint path forward, yet discussions have each time ended short of actions. 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.”

Closing of the deal is subject to regulatory clearances in Russia and the US and is expected by the end of the first quarter of 2020. No European Commission clearance is needed as Fortum already received unconditional merger clearance from the EC last year.

Fortum president Pekka Lundmark today said: “I am pleased that we have taken this important step to create a leader in the European energy transition. I am convinced that this will create attractive opportunities for both companies and their employees. For Fortum’s shareholders this transaction will be earnings accretive. As always, this investment follows our prudent investment criteria to add value reflecting carefully managed risks.”

Fortum said it “intends to be represented on Uniper’s Supervisory Board commensurate with its ownership without delay”.

It added that the strategic and operational rationale was based on the belief that “utilities play a key role in the transition towards a carbon-neutral Europe by decarbonising their energy supply”.

“At the same time, they must ensure that energy is always available at an affordable cost to consumers and industry. When Fortum first announced its investment in Uniper in 2017, Fortum said that together the companies would not only create value for all stakeholders but could also take a leading role in the European energy transition. The portfolios of Fortum and Uniper are synergistic in Sweden and Russia, while the investment in Uniper offers Fortum access to Germany and other continental European markets where the two companies have very little overlapping businesses.”

Fortum added that it “expects to realise attractive returns on its investment in Uniper and wants to continue paying a stable and over time increasing dividend to its shareholders. These strategic grounds remain intact.”

It said in a statement that it “looks forward to working with Uniper’s management team and employees on the creation and implementation of a joint vision. In the rapidly changing and decarbonising European energy sector, the vision must be centred around three cornerstones of Sustainability, Affordability and Security of Supply.”

Lundmark said: “The energy transition will require significant investments in the coming decades not only in renewables, but also in gas, energy storage, and other flexibility solutions to provide security of supply and to decarbonise also industry, transportation, heating, and cooling. We see an ideal match of our complementary competences. With an aggregate EBITDA of approximately 3 billion euros, Fortum and Uniper will be in a strong position to capture the growth opportunities presented by these changes ” provided that we work in full alignment.”

With regard to Uniper staff, Fortum said that it “recognises that the dedication of Uniper employees is the foundation for the current and future success of the company, and wishes to provide them certainty and stability”.

It said it was committed to protecting the interests of Uniper employees and added that it will honour existing shop and collective bargaining.

It also stressed that it “will not cause Uniper to implement compulsory redundancies as a result of the transaction nor to relocate its corporate seat away from Dàƒ¼sseldorf”.

Last month, Prospect, the UK energy trade union which represents Uniper’s British staff of around 1000, called for Fortum to stop its takeover plans, which it called “hostile”.

Sue Ferns, Prospect’s senior deputy general secretary, said at the time: “The uncertainty around Fortum’s plans for Uniper will be worrying for workers in the UK and elsewhere in Europe. As part of the European Works Council we are calling Fortum to cease in its attempts to takeover Uniper so that both companies can get on with their daily business without distraction.”

Fortum boss Lundmark said today: “I understand the recent concerns of the Uniper employees and will ensure that Fortum will be a strong and dependable owner that provides Uniper and its employees with attractive prospects. I am convinced that together we can use the combined skills and resources of Uniper and Fortum to create interesting opportunities for our employees.”

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