December 3, 2018 / 3:30 PM / 8 days ago

Fortum, Elliott have held talks over Uniper: sources

FRANKFURT (Reuters) - Finland’s Fortum (FORTUM.HE), Uniper’s (UN01.DE) largest shareholder, has held talks with activist fund Elliott over how to gain control of the German energy firm, three people familiar with the matter said.

A general view on the area inside the coal power plant Scholven of German energy utility company Uniper where the company plans to build new gas turbines in Gelsenkirchen, Germany, September 28, 2018. REUTERS/Thilo Schmuelgen

Fortum is growing increasingly frustrated over the slow pace of progress in discussions with Germany’s Uniper regarding a cooperation agreement after it took a 47 percent stake this year, the people said.

Uniper has opposed Fortum’s purchase of the stake.

With Uniper Chief Executive Klaus Schaefer still off sick due to cancer treatment, Fortum is exploring ways to increase influence over the group after Russian antitrust authorities limited its shareholding to 50 percent, the people said.

Talks between Fortum and Elliott, Uniper’s second-largest shareholder with a 16.51 percent holding, also touched on possible conditions in which Fortum could buy Elliott’s stake, the sources said.

One of them said that in similar situations the buyer paid a 15-20 percent premium to the stock’s price over the preceding three months.

Uniper’s average three-month weighted share price stands at around 26 euros, implying a price tag of as much as 31 euros per share, or 1.87 billion euros ($2.12 billion), for Elliott’s stake. Fortum paid E.ON (EONGn.DE) 22 euros a share for its 47 percent stake.

A spokeswoman for Fortum confirmed previous remarks that the group is satisfied with its stake in Uniper and that it was willing to cooperate with the company, declining to comment on its future plans.

“As we have said through this autumn, we won’t comment on possible discussions, whether we hold any talks and who we would be talking with,” she said.

Elliott declined to comment.

Shares in Uniper rose as much as 5 percent on the news and traded up 2.8 percent at 23.30 euros apiece at 1515 GMT.

Another source said that Fortum is unlikely to accept these calculations as a common ground for talks, arguing that Elliott’s investment has distorted Uniper’s share price.

“Fortum is not under pressure to do anything and could just keep the status quo unchanged,” one of the people said, adding that it could replace directors on Uniper’s supervisory board over time and gain control over strategy that way.

As long as Uniper owns a water testing license via its Russian unit Unipro (UPRO.MM), Fortum cannot raise its stake to more than 50 percent, Russian authorities ruled earlier this year, leaving a key issue unresolved.

Additional reporting by Jussi Rosendahl in Helsinki; Editing by Ludwig Burger/Keith Weir

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