E.ON to sell remaining Uniper stake to Fortum for $4.5 bln

FRANKFURT/HELSINKI (Reuters) - German energy group E.ON EONGn.DE said on Monday it would tender its remaining 46.65 percent stake in Uniper UN01.DE to Finland's Fortum FORTUM.HE, ahead of an official deadline this week.

E.ON headquarters in Essen, Germany, March 15, 2017. REUTERS/Thilo Schmuelgen

The decision confirms a preliminary deal struck in September, when E.ON agreed it could tender the stake at a fixed price of 22 euros per share, more than twice Uniper’s listing price, to Fortum by Jan. 11.

The deal gives E.ON, which spun off Uniper and its power plants in 2016 to focus on more promising networks and renewables, 3.76 billion euros (3.32 billion pounds) in proceeds and hands Fortum a stake just shy of a controlling majority.

Fortum’s 8.05 billion euro bid runs until Jan. 16 for all other Uniper shareholders, including activist investors Knight Vinke and Elliott Management, with an additional acceptance period possibly taking place between Jan. 20 and Feb. 2.

The question is whether enough will tender to get Fortum over the 50 percent mark.

“We welcome E.ON’s decision to accept our offer, which we believe is a fair reflection of Uniper’s value and performance since its spinoff from E.ON,” Fortum CEO Pekka Lundmark said in a statement.

He believed the investment supported Fortum “in accelerating the transition to a clean and secure energy future.”

Uniper has opposed the deal, saying the combination makes little strategic sense given Uniper’s heavy exposure to gas- and coal-fired power plants compared with Fortum’s focus on clean technologies.

“We stick to our opinion that Uniper can successfully compete as a stand-alone company,” a Uniper spokesman said.

Uniper shares currently trade at 25.90 euros, above the 22 euros Fortum is offering.

The Finnish group said last week Uniper shareholders had tendered 46.81 percent of the company’s share capital, including E.ON in the calculation.

E.ON said members of its management board who hold Uniper stock privately would tender their shares to Fortum as well.

“Our base scenario is that Fortum will still get the majority during this offer. Not many investors have tendered their shares yet, but usually large institutional investors do it at a later stage of an offer,” said Petri Gostowski, analyst at research firm Inderes, who has a “reduce” rating on Fortum stock.

Investment bank UBS said last week that Fortum could also gain control of Uniper by proposing a domination agreement, or by launching a second bid for the remaining stake at a premium.

Reporting by Christoph Steitz and Maria Sheahan in Frankfurt, Jussi Rosendahl in Helsinki; Additional reporting by Tom Kaeckenhoff and Tuomas Forsell; Editing by David Evans and Adrian Croft