Fortum buys majority stake in German fossil fuel firm Uniper

Finland’s majority-state-owned energy firm Fortum is finally acquiring a majority share in German energy giant Uniper. If the deal goes through as planned, Fortum’s stake will rise from the current 49.9 percent to 70.5 percent.

Its investment in Uniper will climb to around 6.2 billion euros.

Fortum said on Tuesday that it had agreed to buy 20.5 percent of Uniper’s shares from Elliott Management and Knight Vinke Asset Management for some 2.3 billion euros.

The move brings to a conclusion a takeover effort that has dragged on for two years. Fortum says it will pay for the transaction out of its cash resources as well as credit from London-based Barclays.

The deal must still be approved by regulators in the US and Russia, which Fortum expects to happen in the first quarter of next year. Fortum also requires that Uniper’s board be reformed immediately to reflect its ownership.

Uniper was created in 2016 when German electric utility E.ON divested its fossil fuel assets.

E.ON had earlier pulled out of the planned Fennovoima nuclear project in Finland, where it was replaced by Fortum in 2015.

Uniper owns 12 natural gas plants and two large coal plants, Maasvlakte in the Netherlands and Ratcliffe-on-Soar in England, which have a combined capacity of 4180 megawatts. It also has nuclear and hydropower operations in Sweden.

Uniper is one of Russian state energy company Gazprom’s partners in the Nord Stream 2 pipeline project, intended to pump natural gas from Russia to Germany via the Baltic Sea, including Finnish territorial waters. The German company also has a Russian subsidiary, Unipro.

Uniper hopes to build a liquid natural gas (LNG) facility in Wilhelmshaven, near Bremen on Germany’s northern coast, in partnership with Exxon Mobil.

Earlier this year Climate Action Network (CAN) Europe rated Fortum as one of the EU’s worst emitters of greenhouse gas emissions, largely due to its ownership share in Uniper.

Fortum has called for “ambitious and prompt action” to tackle climate change, calling it “one of the biggest challenges for mankind” and saying it aims to provide its customers with “environmentally friendly products”.

The Finnish state owns 50.76 percent of Fortum, with various state agencies and public pension funds among its other major owners.