9 Oct 2019 14:39

Russian Econ Ministry discussing Fortum-Uniper deal situation with both parties - Oreshkinn

MOSCOW. Oct 9 (Interfax) - The Russian Economic Development Ministry is discussing the situation with the Fortum-Uniper, the fate of which is being decided largely in Russia, with both parties, Economic Development Minister Maxim Oreshkin told reporters.

Fortum reached an agreement with E.ON in 2017 to buy almost 50% of Uniper, which was opposed to the acquisition. Uniper's supervisory board and management board issued a joint statement saying that Fortum's offer to buy the shares was not favourable for shareholders. Uniper owns 83.73% of Russian power company PJSC Unipro , formerly known as OGK-4.

Fortum does not yet have permission from Russia's Federal Anti-monopoly Service to increase its stake in Uniper to 50%, as this is prevented by federal law No. 57 on foreign investment in strategic sectors, the head of the regulator, Igor Artemyev said. "Since Fortum belongs to Finland, it cannot buy more than a 50% interest in strategic assets in Russia. Electricity does not have such status, but a water utility that is within the perimeter of the company being acquired (Unipro) does. They can't go any further until they dispose of this water utility," Artemyev said in an interview with Kommersant in September 2018.

Fortum CEO Pekka Lundmark said in early June after a meeting with President Vladimir Putin at the St. Petersburg International Economic Forum that the company was optimistic about resolving the water utility issue. Following the discussion, Putin gave instructions to look at the issue of existing restrictions on the stakes foreign investors can hold in certain sectors.

"We're working on this. We're holding meetings with both companies," Oreshkin said.

Fortum has just entered into agreements with Elliott Management Corporation and Knight Vinke Energy Advisors to acquire about 20.5% of shares in German energy company Uniper for about 2.3 billion euros, or 29.93 euros per share. The deal will increase Fortum's stake in Uniper to more than 70.5% and its total investment in the German company to 6.2 billion euros. The closing of the deal is subject to regulatory approval in Russia and the United States. Fortum expects to close the deal before the end of the first quarter of 2020.

Oreshkin declined to comment on whether a new configuration of the deal would be referred to the government's foreign investment commission.