February 2, 2018 / 8:59 AM / 8 months ago

UPDATE 1-Fortum vows to protect dividends despite bid for Uniper

(Recasts with dividend comment)

HELSINKI, Feb 2 (Reuters) - Finnish utility Fortum , which has made an 8 billion euro ($10 billion) takeover offer for Germany’s Uniper, on Friday proposed a larger than expected dividend and said it aims to avoid any reductions in future payouts.

State-controlled Fortum last year secured a deal with E.ON to buy its 46.65 percent stake in Uniper and then launched a full bid under German takeover rules.

Reporting full-year results on Friday, Fortum proposed an annual dividend of 1.10 euros per share, unchanged from last year and above analysts’ average forecast for 0.95 euros.

“Our ambition is to pay a stable, sustainable and increasing dividend now and in the future, and given the prevailing market conditions, our goal is to avoid a temporary dividend cut,” CEO Pekka Lundmark said.

Inderes Equity Research analyst Petri Gostowski, who has a “reduce” rating on the stock, said that dividend prospects had been a concern and the company’s message would “please the market”.

Fortum shares were up 4.3 percent by 0853 GMT.

The company also reported quarterly profit up 57 percent year on year, citing higher power prices, good hydropower volumes and recent acquisitions.

CEO Lundmark added that he sees plenty of win-win opportunities for co-operation with Uniper in the future.

Including E.ON’s stake, shareholders in Uniper have so far tendered only 46.93 percent of shares to Fortum.

“We have entered into talks with Uniper to formalise the relationship between our companies after the transaction is finalised. We truly see our investment as a win-win for all involved,” Lundmark said.

Uniper considers the bid as hostile and too low. The offer expires on Feb. 7. ($1 = 0.7992 euros) (Reporting by Jussi Rosendahl; Editing by David Goodman)

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