Finnish state-controlled utility Fortum is set to launch a takeover offer of EUR8.05bn to German energy company Uniper in an all-cash deal.

In this regard, Fortum has signed a transaction agreement with E.ON wherein the latter will have the right to decide to tender its remainder stake of 46.65% in Uniper in early 2018.

Fortum is looking to acquire Uniper as the latter’s business is highly complementary with it. In Sweden, Uniper's production portfolio is primarily based on CO2-free hydro and nuclear power while in Russia, it is based on highly efficient gas-fired generation.

Uniper was formed in 2016 by the separation of E.ON’s fossil fuel business. In September 2016, E.ON divested 53.35% stake in Uniper to shareholders through a spin-off to get the new entity listed on the Frankfurt stock exchange.

Fortum intends to offer E.ON the same total value per share as proposed to all other stakeholders who tender.

As part of its takeover of Uniper, Fortum will primarily aim to acquire E.ON’s remainder stake for EUR3.76bn, at EUR22 per share in an all-cash deal.

Fortum president and CEO Pekka Lundmark said: “We are investing in a strong, successful company with a diversified portfolio.

“Fortum is absolutely committed to work for a cleaner Europe. To make this vision a reality we must also provide customers with a secure energy supply at a competitive price during the transition towards lower emissions.

“Conventional energy, especially gas, can respond to the increasing intermittent renewable production, providing the flexibility needed to ensure supply in geographies where sufficient hydropower resources are not available."

The agreement also includes a clause that if E.ON does not tender its stake, then the Finnish firm will be entitled to divest any shares of Uniper it had purchased in connection with the bigger takeover offer to the German firm.

Additionally, E.ON will pay Fortum at least 20% of the total equity value of its 46.65% stake in Uniper as compensation payment.

Fortum said that its offer will be based on competition and other regulatory approvals and anticipates to finalise the transaction in mid-2018.

E.ON management board chairman Dr Johannes Teyssen said: “We welcome Fortum's offer as an opportunity for Uniper shareholders to sell at a valuation level that reflects Uniper's strong performance since its spin-off.

“We consider Fortum as a responsible and reliable strategic partner to Uniper with excellent complementary businesses and capabilities.”

Last week, Uniper had rejected Fortum’s takeover offer, terming it as unsolicited with its CEO Klaus Schäfer stating that it did not align with the company’s strategy.

Image: Fortum headquarters in Espoo, Keilaniemi, Finland. Photo: courtesy of Fortum Keilaniemi.