FRANKFURT Finland's Fortum (FORTUM.HE) is in talks with German energy group E.ON (EONGn.DE) about buying its 46.65 percent stake in Uniper (UN01.DE), Bloomberg reported on Wednesday, sending shares in Uniper higher.
Uniper, E.ON and Fortum declined to comment on the report.
Sources had told Reuters this week that E.ON had hired Goldman Sachs (GS.N) to explore options for a sale of its remaining stake in Uniper, the power plant and trading business it spun off last year.
Uniper, which has a market value of 6.1 billion euros ($6.8 billion), operates everything from hydroelectric, coal- and gas-fired plants to storage assets and trading floors, and holds stakes in gas pipelines, LNG terminals and nuclear plants across Europe.
Analysts at Goldman Sachs had singled out Uniper as a takeover target earlier this year, mentioning RWE (RWEG.DE), EPH and Fortum as "potential consolidators" in what the brokerage says could be a big year for utility M&A in Europe.
State-controlled Fortum has been looking for mergers and acquisitions for years following its 9.3 billion euro divestment of power distribution grids, but it has so far announced only relatively small investments.
CEO Pekka Lundmark said in March he was striving to clinch a sizeable acquisition this year as investors are impatient for the cash to be put to use. Others are worried that as time ticks on, Fortum is more likely to rush into an overpriced deal.
Analysts have said that German firm Uniper's Swedish hydro power assets might be of interest to Fortum, but Lundmark declined to name any specific targets at the time.
Sources had told Reuters in recent days that Fortum would only be interested in certain assets of Uniper, most notably its hydroelectric plants, making a bid for the whole group less likely.
($1 = 0.8912 euros)
(Reporting by Maria Sheahan, Christoph Steitz, Jussi Rosendahl and Arno Schuetze; Editing by Victoria Bryan/Keith Weir)