Classic Dom

8 October 2019 By George Hay Follow @gfhay

Finland’s Fortum is buying the 20.5% of the German utility held by activists Knight Vinke and Elliott for 2.3 bln euros. Pushing its own holding above 70% gives Fortum effective control. But it makes second-class citizens of Uniper shareholders that don’t get the same deal.

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Fortum was on Oct. 8 set to gain control of German utility Uniper by acquiring the stakes of activist funds Elliott Management and Knight Vinke.

The state-controlled Finnish utility has been seeking to control of the German company since 2017 but Uniper's top management had opposed a full takeover, warning it could threaten Uniper's credit rating.

Fortum will pay 29.93 euros per share for the combined stake of more than 20.5% held by the two funds. This equates to a price of 2.3 billion euros ($2.52 billion) and will raise Fortum's Uniper stake to more than 70.5% from 49.99%.

Shares in Uniper fell 9.2% to 27.3 euros per share as of 0924 GMT on Oct. 8. Fortum's stock was trading at 21.1 euros, up 0.9%.

The agreement still needs to be cleared by the United States and Russia. Russian regulators have so far capped Fortum's ownership in Uniper at 49.99% due to a strategic water licence operated by the German firm's local subsidiary.

Fortum said it would rule out a domination agreement and profit and loss transfer agreement with Uniper for at least two years. It also promised not to squeeze out minority shareholders for the same period.

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