Germany's Uniper an M&A target, says Goldman Sachs

FRANKFURT (Reuters) - Uniper UN01.DE, the power plant and energy trading business spun off by German utility E.ON EONGn.DE last year, is a potential takeover target, Goldman Sachs said on Thursday.

A logo of the German energy utility company Uniper SE is pictured at their headquarters in Duesseldorf, Germany April 19, 2016. REUTERS/Ralph Orlowski

Goldman Sachs says there are a number of potential buyers and Uniper’s relatively small size makes it a target. E.ON has also said it plans to sell its remaining 46.65 percent stake.

“We believe that investors might begin to incorporate an M&A premium in their valuations, and we incorporate a weighting to an M&A-based valuation in our price target,” the brokerage wrote in a note, starting coverage of Uniper with a “buy” rating.

Uniper was spun off from E.ON in September in one of the most drastic corporate responses so far to an ongoing crisis in the power sector that has pushed many conventional coal and gas plants into loss in favor of solar and wind energy.

Since its listing on Sept. 12, Uniper’s shares are up by a third and currently trade at 13.68 euros apiece, compared with Goldman Sachs’ target price of 16.6 euros. Of the 21 analysts that cover the stock, 14 have a “buy” recommendation.

E.ON has signaled its intention to sell more of Uniper, which has a market valuation of 4.8 billion euros ($5.1 billion), but said further stake sales would not happen before 2018 due to tax reasons.

Goldman Sachs singled out Germany's RWE RWEG.DE, acquisitive Czech energy group EPH and Finland's Fortum FUM1V.HE, which in November said it was looking for M&A targets in Europe, as "potential consolidators."

A spokeswoman for RWE said that the group currently had no such plans.

Fortum and Uniper declined to comment.

EPH, which last year bought the German lignite activities of Sweden’s Vattenfall [VATN.UL], was not immediately available for comment.

Reporting by Christoph Steitz, Jussi Rosendahl and Jason Hovet, editing by Elaine Hardcastle