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Fortum plans 8.05b euros bid for EON fossil-fuel arm Uniper

[FRANKFURT] Finnish utility Fortum Oyj plans to offer 8.05 billion euros (S$12.99 billion) for EON SE's legacy fossil fuel and trading business, Uniper SE, as consolidation in the European power sector accelerates.

Fortum is in advanced talks about buying EON's remaining 47 per cent stake in the business, the Espoo, Finland-based company said in a statement Wednesday in response to a Bloomberg News story. Uniper management rebuffed a previous Fortum proposal for an acquisition, so if Fortum reaches an agreement with EON, it plans to make a voluntary takeover offer of 22 euros a share in cash to all Uniper investors, it said.

The proposed deal reflects the changing utility landscape in Europe, where the rise of renewable energy is making it harder to make money from traditional coal and gas plants. As EON spun off Uniper, German's RWE AG sold part of its green unit Innogy SE. French utility Engie SA is halfway through a program to sell most of its conventional plants to reinvest in renewables, while EDP Energias de Portugal SA is selling its Spanish gas network in a shift away from fossil fuels.

The offer represents about a 4.5 per cent premium to Uniper's Tuesday closing price. Shares of Uniper have more than doubled in the past year on speculation the company could be a takeover target. There's no certainty the talks will result in an agreement, Fortum said. 

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"The offer would be an attractive opportunity for Uniper shareholders to capture the full value of their investment," Fortum Chief Executive Officer Pekka Lundmark said in the statement. "Uniper shareholders could lock in the significant share price gains related to a significant degree to the prolonged takeover speculation in recent months."

BLOOMBERG