Finland's Fortum snaps up EON's fossil fuels stake

 09 Jan 2018 - 22:38

Finland's Fortum snaps up EON's fossil fuels stake

AFP

Frankfurt am Main:  German energy giant EON on Monday said it had accepted an offer to sell its remaining stake in fossil fuels spinoff Uniper to Finland's Fortum.

The voluntary takeover will see EON sell its 46.65-percent stake in Uniper to Fortum for 22 euros ($26) per share, netting the German utility some 3.76 billion euros.

The deal was widely expected after the two groups announced in September they were close to an agreement, but is likely to come in for criticism as Uniper shares are currently trading at around 26 euros.

"This transaction enables us to sell our entire Uniper stake at an attractive price for EON," the German group's chief executive Johannes Teyssen said in a statement.

"EON will now focus fully on its customers and core businesses in the new energy world."

But given Uniper's rising stock, the Handelsblatt financial daily said Teyssen could expect some "critical questions" about the deal.

Uniper's management and supervisory board members had earlier urged shareholders to reject the offer, saying it did not reflect the company's "true value" and offered few strategic benefits.

Uniper CEO Klaus Schaefer also told German media last month that Fortum had not been clear about its intentions for the company and its roughly 13,000 employees.

Fortum for its part has said it would focus on being "an active, supportive and reliable" shareholder and partner to Uniper.

Fortum's takeover offer formally expires on January 16.

EON said management board members who hold Uniper stock privately would also be tendering their shares to Fortum.

The Finnish firm, whose key markets are in Nordic and Baltic countries as well as Russia, Poland and India, expects to secure regulatory approval for the Uniper deal by mid-2018.

EON, one of Germany's four largest energy companies, spun off its coal- and gas-fired power plants into Uniper in 2016 before floating it on the Frankfurt stock market.

The parent company meanwhile retained control of its gas and electricity grid businesses, renewable plants and customer service.

The move came as German energy utilities face tough choices during the government-spurred "energy transition" from fossil and nuclear generation to renewables.

EON last year booked a record loss of more than eight billion euros as it accounted for depreciations in the value of assets linked to the Uniper spin-off.