February 7, 2018 / 9:22 AM / 5 months ago

Fortum falls short of majority control in Uniper

HELSINKI (Reuters) - Finnish utility Fortum (FORTUM.HE) fell short of gaining majority control of German peer Uniper (UN01.DE) with its 8.05 billion euro ($10.0 billion) takeover offer, after Uniper’s management advised shareholders not to tender their shares.

FILE PHOTO: The flag of Uniper SE flutters in front of the utility's firm headquarters previously used by German utility giant E.ON in Duesseldorf, Germany, June 8, 2016. REUTERS/Wolfgang Rattay/File Photo

Fortum was offered just 0.47 percent of Uniper shares in the tender that expired last week, on top of a 46.65 percent stake that it negotiated separately with E.ON (EONGn.DE) which had spun off Uniper in 2016.

“We are satisfied with the shareholding we have received, which will, when the transaction is finalised, make Fortum the largest shareholder in Uniper,” Fortum Chief Executive Pekka Lundmark said in a statement.

“Our priority now is to establish the foundation for such cooperation through talks with Uniper.”

Uniper had fought against the bid, saying it was hostile and too low and that the combination would make little sense given its heavy exposure to gas- and coal-fired power plants, compared with Fortum’s focus on clean technologies.

“We are strengthened by the trust placed in us by our shareholders, who overwhelmingly followed our recommendation and did not accept the takeover offer,” Uniper Chief Executive Klaus Schaefer said in a statement.

“This shows us that the capital market continues to believe in our strategy and our long-term competitiveness as an independent company.”

As Uniper’s top shareholder, Fortum will be able to influence the group’s strategic direction via seats on its supervisory board and will have the largest presence at its shareholder meeting once the deal closes later this year.

Sources told Reuters last year that Fortum was mainly interested in Uniper’s hydropower and nuclear power assets, and hoped to restructure other parts of Uniper which it could only do if it had full control.

Fortum has denied such plans, saying it was mainly interested in E.ON’s stake and launched the full bid only due to German takeover rules.

A spokesman for Fortum declined to comment on whether the company would seek to buy more shares, but investors and analysts expect the Finnish group to eventually gain full control.

“Over the mid-term, Fortum will become actively engaged at Uniper. Sooner or later they will acquire the majority,” said Thomas Deser, fund manager at Union Investment, which owns about 26 million euros worth of Uniper stock.

Fortum could buy additional shares on the open market and would only be required to disclose passing certain thresholds, such as 50 percent, Credit Suisse said in a note last week.

If Fortum bought additional shares outside the open market at a higher price within the next twelve months, shareholders that have already tendered would be entitled to get the difference, it added.

The offer is still subject to competition and regulatory approvals and Fortum expects to finalize the transaction in mid-2018.

Uniper shares rose 2.2 percent to 23.4 euro apiece.

($1 = 0.8081 euros)

Additional reporting by Christoph Steitz in Frankfurt and Tom Kaeckenhof in Duesseldorf; Editing by Elaine Hardcastle

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