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Finnish government backs Fortum's Uniper bid despite Nord Stream II link
October 10, 2017 / 12:49 PM / 10 days ago

Finnish government backs Fortum's Uniper bid despite Nord Stream II link

HELSINKI, Oct 10 (Reuters) - The Finnish government fully supports state-controlled utility Fortum’s bid for Uniper despite the German firm’s investment in Russia’s Nord Stream 2 gas pipeline, Economy Minister Mika Lintila said on Tuesday.

Fortum said last month it would launch an 8.05 billion euro ($9.5 billion) takeover bid for Uniper, the power stations operator and energy trading business partly owned by German utility E.ON.

Fortum is mainly interested in Uniper’s hydropower plants and interests in Swedish nuclear power stations, according to sources. However, Uniper, along with four other Western companies, has also pledged to invest up to 950 million euros each in the Nord Stream 2 pipeline project which should double the amount of gas directly shipped from Russia to Germany.

Some Finnish politicians have questioned whether the government’s indirect involvement via Uniper would tie Finland to the Nord Stream project, which has split the European Union over worries of Russia’s growing influence.

“This is purely a business transaction by Fortum ... The government has not had any discussion about an intervention, and it will not intervene,” Lintila told Reuters by phone.

Eastern European and Baltic states fear the pipeline will increase reliance on Russian gas and undermine Ukraine’s role as a gas transit route, but Germany and other beneficiaries in northern Europe back the project.

Finland’s Nordic neighbours Sweden and Denmark have also voiced their concern over Russia’s growing influence, but Finland has remained neutral on the issue, saying the pipeline, built by Gazprom, is primarily a commercial project.

“Nord Stream 2’s permits will be handled exactly the same way as for Nord Stream 1 ... This will not complicate the matter or affect it at all,” Lintila said.

“The permits are asking for the use of the Finnish economic zone in the Baltic sea. International law dictates that we would need very strong reasons to deny the permit,” he said.

CAMPAIGN TO BLOCK DEAL

Fortum last month clinched a deal to buy E.ON’s remaining 46.65 percent stake in Uniper, and must launch a bid for all shares in Uniper due to German rules, although it said it was not looking to take over the company completely.

Uniper has considered Fortum’s approach as hostile, saying Fortum was eventually looking to split the company due to strategic differences. Sources told Reuters that Uniper has hired Morgan Stanley to try to block the deal.

Uniper has advertised in Finnish newspapers in the last few days, arguing that its coal-fired plants were not a good fit in Fortum, which is focused on clean energy.

Lintila said he had heard of market rumours that the government planned to review Fortum’s bid, but said they were not true.

“There’s no review. It seems all parties are not happy about Fortum’s bid, and they assume they can still block it, or at least drive up the share price,” he said.

Fortum has offered 22 euros per share in cash, compared to Uniper’s current price of 23.7 euros.

Fortum, 50.8 percent owned by the state, is focused on carbon-free power generation and has been looking for a deal since selling its power distribution grids for 9.3 billion euros in 2014. (Additional reporting by Christoph Steitz and Pamela Barbaglia; Editing by Jussi Rosendahl and Susan Fenton)

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