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Fortum says energy transition needs Uniper, hikes stake

Wind turbines. Photo by: Fortum (www3.fortum.com).

October 9 (Renewables Now) - Finnish utility Fortum Oyj (HEL:FORTUM) wants to take control of Germany’s Uniper SE (ETR:UN01) in a EUR-2.3-billion (USD 2.5bn) transaction.

The Finnish company said on Tuesday it has agreed to buy the combined 20.5%-plus stake in Uniper held by funds managed by Elliott Management Corporation and Knight Vinke Energy Advisors Limited at EUR 29.93 per share. The move will boost Fortum’s interest in the German energy group to 70.5% as it already held 49.99% at end-June.

Fortum explained in a statement that, while the company is dedicated to pursuing clean energy developments, it considers Uniper’s gas-fired generation to be a necessary component for the energy transition. It will provide security of supply for the rising share of renewables in the system, the company noted.

“The energy transition will require significant investments in the coming decades not only in renewables, but also in gas, energy storage, and other flexibility solutions to provide security of supply and to decarbonise also industry, transportation, heating, and cooling. We see an ideal match of our complementary competences,” said Pekka Lundmark, Fortum’s President and CEO.

The Finnish utility pointed out that unlike in Germany where Uniper relies on coal and gas, in Sweden the group has a sizable hydropower portfolio that complements the growing share of wind power in the Nordics. There are synergies between the portfolios of the two companies in Sweden and Russia and the agreed transaction will also give Fortum access to Germany and other continental European markets with little overlap.

The acquisition is awaiting customary regulatory clearances in Russia and the US. It will be financed with existing cash resources and committed credit facilities underwritten by Barclays Bank. Closing is scheduled for the end of next year's first quarter.

(EUR 1.0 = USD 1.098)

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Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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