- Title: Finland's Fortum to gain control of Uniper in $2.5 bln deal
- Date: 8th October 2019
- Summary: (SOUNDBITE) (English) FORTUM CHIEF EXECUTIVE PEKKA LUNDMARK, SAYING: "Of course the news today is that we have signed an agreement with the two activist investors Elliott and Knight Vinke and this means that our shareholding in Uniper will increase to at least 70.5%." LUNDMARK SPEAKING (SOUNDBITE) (English) FORTUM CHIEF EXECUTIVE PEKKA LUNDMARK, SAYING: "A very important thing is that we have given a commitment now not to do a domination agreement for a period of at least two years." PHOTOGRAPHER (SOUNDBITE) (English) FORTUM CHIEF EXECUTIVE PEKKA LUNDMARK, SAYING: "But the fact that we over now this period of two years of no domination gives us the possibility to now in hopefully a very constructive way sit down with both the management of Uniper and the employee representatives and create a joint vision, joint strategy and a joint operational plan." LUNDMARK'S HANDS (SOUNDBITE) (English) FORTUM CHIEF EXECUTIVE PEKKA LUNDMARK, SAYING: "We have enormous respect for Uniper and their employees and we understand very well the concerns that the employee representatives have signalled. We are willing to make a good agreement with them according to German practice where their interests are safeguarded in a proper way. I am fully confident that this type of an agreement can be fully achieved." PEN ON NOTEBOOK (SOUNDBITE) (English) FORTUM CHIEF EXECUTIVE PEKKA LUNDMARK, SAYING: "We have had intensive discussions with the Russian authorities over the past few days, weeks and months and we are quite confident that a solution can be found. As a matter of fact, we would not have signed a transaction like this unless we would have this confidence." GLASS OF WATER (SOUNDBITE) (English) FORTUM CHIEF EXECUTIVE PEKKA LUNDMARK, SAYING: "I did raise the subject with him in connection with the dinner at the St. Petersburg Economic Forum where President Putin met with several CEOs of western companies who had invested in Russia. After that discussion -- this has been in media as well -- he then gave a task to the administration to see if this issue could be solved one way or another." LUNDMARK SPEAKING
- Embargoed: 22nd October 2019 13:50
- Keywords: Uniper Fortum Pekka Lundmark Russia water Elliott Knight Vinke
- Location: DUESSELDORF & FRANKFURT, GERMANY
- City: DUESSELDORF & FRANKFURT, GERMANY
- Country: Germany
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA003B08LTHP
- Aspect Ratio: 16:9
- Story Text: Finnish utility Fortum is set to gain control of Germany's Uniper by acquiring the stakes of activist funds Elliott and Knight Vinke, potentially ending a long-running deadlock over ownership of the group.
State-controlled Fortum has been seeking control of the energy firm since 2017, but Uniper's top management had opposed a full take-over, warning it could result in a break-up and threaten the firm's credit rating.
If approved by regulators, the agreement between Fortum and the two activist funds would simplify the complex ownership structure that has made resolving the stand-off difficult.
Uniper's fleet of coal- and gas-fired power plants, providing round-the-clock baseload energy supply, are a key addition to Fortum's existing assets, mainly in hydroelectric, nuclear and combined heat and power generation.
Renewable power has become a major focus for energy groups world-wide, but with generation tending to be intermittent and storage difficult, fossil fuels are still needed in the mix.
"We have given a commitment now not to do a domination agreement for a period of at least two years," Fortum Chief Executive Pekka Lundmark said.
As part of the deal, Fortum would pay 29.93 euros per share for the combined stake of more than 20.5% held by the two funds. This equates to a price of 2.3 billion euros ($2.5 billion) and will raise Fortum's Uniper stake to more than 70.5% from 49.99%.
Uniper said it was analysing the matter, with a view to finding the best solution for "Uniper employees, our business and customers, our shareholders and partners".
Knight Vinke and Elliott declined to comment.
Shares in Uniper fell 7.9% to 27.63 euros per share after Fortum said it would rule out any domination agreement, profit and loss transfer agreement or squeeze-out of minority shareholders for at least two years.
Fortum's stock fell 2%, burdened by fears that a deal could put its credit rating at risk.
The agreement still needs to be cleared by the United States and Russia. Russian regulators have so far capped Fortum's ownership in Uniper at 49.99% due to a strategic water licence operated by the German firm's local subsidiary Unipro.
Lundmark told analysts that discussions with Russian regulators over the past months led Fortum to believe that "a solution can be found."
"We would not have signed a transaction like this unless we would have this confidence," added Lundmark.
(Production: David Sahl, Michele Sani) - Copyright Holder: REUTERS
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