Fortum closes transaction to become majority owner in Uniper

Fortum Corporation has today closed the first tranche of the agreement to purchase the Uniper SE (“Uniper”) shares held by Elliott Management Corporation and its affiliates and Knight Vinke Energy Advisors Limited and its affiliates. Fortum now holds 69.6% of the shares and voting rights in Uniper. The second tranche, a minimum of 1.0% and a maximum of 3.8% of the shares, will be closed within two months of today. Fortum is paying up to EUR 2.6 billion for the combined shareholding, increasing Fortum’s total investment in Uniper to a maximum of EUR 6.5billion.

“Today represents an important milestone on our path to build a leading energy group and a true European champion. Uniper is a successful, international energy provider and trader, and a great match with Fortum. By aligning our strategies, we will be able to take a leading role in the European energy transition and create value for all stakeholders,” says Pekka Lundmark, President and CEO of Fortum.

“To drive the energy transition forward, carbon emissions from power generation must be reduced and significant investments must be made not only in renewables but also in increasingly clean gas, energy storage, and other flexibility solutions that provide security of supply in the next decades,” Pekka Lundmark continues.

In Fortum’s view, Uniper’s recent strategy update provides a good starting point for the strategy alignment and development of a joint vision for Fortum and Uniper. Fortum welcomes Uniper’s carbon neutrality target for its European generation by 2035 and supports Uniper’s exit plan for coal assets and commitment to develop clean gas solutions. Fortum’s own European generation is already 96% carbon free. As one outcome of the joint strategy work, Fortum and Uniper want to set ambitious decarbonisation targets covering the combined operations of both companies.

“We welcome Fortum’s support of our future strategic direction as they become our new majority owner,” says Andreas Schierenbeck, CEO of Uniper. “The Uniper team wants to empower the energy evolution towards a clean and secure future with our unique competencies, and our transition to a climate-friendlier company is well under way. We look forward to discussing with Fortum in the coming weeks how our two strong companies can drive the strategic change needed in the energy world.”

In the interest of strengthening the basis for a trustful engagement with Uniper and its employees, Fortum has ruled out any domination and/or profit and loss transfer agreement (DPLTA) or squeeze-out of minority until the end of 2021. Thereby Uniper remains a separate company, listed in Germany. Fortum wishes to provide Uniper employees certainty and stability and is in ongoing constructive talks with the Uniper Works Councils about commitments to benefit Uniper employees. Fortum is also currently discussing with Uniper the process by which Fortum’s Supervisory Board representation is to be arranged to best facilitate strategic alignment and collaboration in the interests of both companies.

The transactions are financed with existing cash and committed credit facilities. Fortum and Uniper’s financial positions are solid as confirmed by Standard & Poor’s recent rating affirmation of BBB, with negative outlook, for both companies. Fortum’s key objective is to have a solid investment grade credit rating of at least BBB to maintain its financial strength, preserve financial flexibility and good access to capital markets for the enlarged group post-closing. Fortum and Uniper will carefully manage their balance sheets going forward. Following closing of the transactions, Fortum has substantial available committed credit facilities of EUR 4.5 billion in addition to currently existing cash reserves of approximately EUR 2.5 billion. Both companies are focusing on optimising cash flow and carefully managing capital expenditures in the current market and business environment.