Fortum deal

Uniper's race to the Finnish

Abendstimmung am Braunkohlekraftwerk
A deal is no longer pie in the sky. Source: dpa

Finnish power firm Fortum’s courting of German rival Uniper has been anything but love at first sight, yet the takeover saga continues to throw up plenty of romantic intrigue. Fortum, the largest energy supplier in the Nordic states, has been chasing its much larger counterpart since the summer. Boss Pekka Lundmark believes that capturing Uniper will help it achieve its aim of becoming the most important player in Central Europe’s electricity market.

But the Germans aren’t playing ball. Despite two offers of up to €22 per share, which valued Uniper at about €8 billion, its management is still holding out and advising shareholders against selling. A deal would not reflect the actual value of Uniper and is not in the interest of the company, its shareholders nor employees, they said.

Most analysts, by contrast, agree that the marriage makes business sense. Uniper, created when E.ON spun off its fossil fuels business, and Fortum, which specializes in nuclear and renewable sources, would have a combined European market share of 10 percent and have shared interests in Russia, gas and hydropower. This is recognized by E.ON, which has already agreed to sell its 47 percent stake in Uniper for €22 per share, netting it just under €4 billion.

But the deadlock may not be purely about cash and the company’s best interests – it could be personal.

It seems Mr. Schäfer has reached the end of the line, and that a deal is now inevitable.

The problem is that E.ON CEO Johannes Teyssen failed to tell Uniper boss Klaus Schäfer about the agreement. Mr. Teyssen feared he’d try to block the move and demand a higher price. That’s put Mr. Schäfer’s nose out of joint.

But now it appears that vengeance and watching out for his shareholders may not be his only motives for rejecting Fortum’s overtures. According to an insider, Mr. Schäfer had considered merging his fossil fuel electricity business with that of German energy giant RWE. In this scenario, he wanted to become RWE’s CEO, while current RWE boss Rolf Martin Schmitz would take over as chairman. The E.ON-Fortum deal has thwarted these plans.

In fairness to Mr. Schäfer, he does of course have several genuine concerns. He fears the Finns could dismantle Uniper, putting at risk 13,000 jobs, including 5,000 in Germany. His coal-fired business, already under threat from government plans for a rapid phase-out, is particularly vulnerable. Mr. Lundmark has said publicly that he doesn’t want coal. “Climate change is the greatest threat to humanity, and coal is the greatest climate sinner,” he says. “I have no problem with a premature coal exit in Germany.”

The good news for both sides is that they are now at least talking. Mr. Schäfer and Mr. Lundmark met last week. “Klaus and I had a good first discussion on how we will work together in the future,” said Mr. Lundmark, adding that he does not want to “take control” of Uniper.

It seems Mr. Schäfer has reached the end of the line, and that a deal is now inevitable. But when it will go through may depend on when he gets over his business – and perhaps personal – regrets.


David Reay of Handelsblatt adapted this for Handelsblatt Global from an article that originally appeared in the business magazine WirtschaftsWoche, a sister publication. To contact the author:

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