Fortum fought for years for control of Uniper. Now, however, the German company threatens to fall into the arms of the German state. It would be a big setback for Fortum.
Finland the half-owned energy company Fortum made a large sum by selling its electricity transmission operations in Finland and Sweden in the early 2010s. Soon after this, the company started looking for an investment destination for its money and finally found one in the German energy company Uniper.
The Uniper deal took several years to complete. It wasn’t until 2020 that Fortum managed to increase its ownership of Uniper to more than 70 percent. However, as a result of the European gas crisis, Uniper is in danger of falling into the arms of the German state.
HS tells year by year how Fortum, majority owned by the Finnish state, ended up in the middle of the German energy crisis.
2013
Fortum announces that it is selling its electricity transmission operations in Finland and Sweden. At the same time, it says that in the future it will focus on electricity and heat production and sales.
2014
Fortum receives a total of 9.3 billion euros from the deals completed in Finland and Sweden and starts looking for a suitable investment destination for the money.
In Finland, Fortum’s electricity networks are bought by the electricity distribution company Caruna.
2016
The German energy company Eon is giving up its traditional power plants. They will be transferred to a company called Uniper owned by Eon, which will be listed on the stock exchange.
Uniper produces energy with hydropower, coal and gas. It also owns shares in gas pipelines, nuclear power plants and LNG terminals across Europe.
Uniper’s stock market development is slow at the beginning. Fortum is interested in the company as a potential investment target. In particular, Uniper’s hydropower holdings in Sweden are attractive to Fortum.
2017
Fortum starts discussions with Eon to buy its stake in Uniper. Eon owns about 47 percent of Uniper.
Detailed information about the negotiations between Fortum and Eon is leaked to the public, as a result of which Fortum is forced to make a public offer for Uniper.
Uniper’s management opposes the sale of the company to Fortum. Managing director Klaus Schäfer wonders in an interview with Helsingin Sanomat why Fortum wants to buy a large, expensive company that does not fit its strategy. He suspects that Fortum’s intention is to break up the company.
2018
Eon announces that it will sell 47 percent of Uniper’s shares to Fortum. Fortum pays EUR 3.76 billion for the shares. The total value of the deal is eight billion euros.
To Uniper’s other shareholders, Fortum offers 22 euros per share. Uniper’s other shareholders include the foreign investment companies Elliott and Knight Vinke.
Uniper has a subsidiary called Unipro in Russia. One of its power plants has a license related to the control of drinking water, which, according to the Russian law on strategic investments, cannot fall into the hands of a foreign state company. The article prevents Fortum from acquiring a majority of Uniper’s shares without the approval of the Russian competition authority.
Fortum will have to wring hands with the Russian authorities for another two years before it succeeds in acquiring the majority of Uniper’s shares for itself.
2019
The situation in Uniper stores is getting easier. The managers who opposed the sale of Uniper are leaving the company. At the same time, Fortum receives conditional approval from the Russian Foreign Investment Commission for the acquisition of the majority of shares in Uniper.
2020
The Russian competition authority finally gives Fortum official permission to buy Uniper shares of Elliott and Knight Vinke investment companies. As a result of the transaction, Fortum’s ownership in Uniper will increase from just under 50 percent to more than 70 percent.
After the deals, CEO Pekka Lundmark leaves Fortum and moves to manage Nokia. Fortum’s new CEO will be appointed in June Markus Rauramo.
2021
Fortum continues its takeover of Uniper by appointing a German as the company’s CEO by Klaus-Dieter Maubach, who previously headed Uniper’s supervisory board and also sat on Fortum’s board of directors. At the same time, the head of Fortum’s Generation unit, which is responsible for electricity production, will be appointed CFO of Uniper Tiina Tuomela. A little later, Fortum’s legal and HR directors will also take over Uniper’s management.
The prices of raw materials are rising to a record high and gas supply is tightening in Europe. At the same time, Uniper adjusts Fortum’s profit for the whole year. The company’s turnover will swell to 112 billion euros from 49 billion euros the previous year, and operating profit will rise to 2.5 billion euros from 1.3 billion euros.
2022
January
Uniper prepares for the rise in energy prices with a large financing arrangement. It receives eight billion euros in financing from Fortum, which consists of a shareholder loan and a guarantee from the parent company. In addition, Uniper is applying for a short-term standby credit of two billion from the German state-owned KfW Bank.
The market is suspicious of Uniper’s financing arrangement. The company’s share price turns downward and also drags Fortum’s share with it.
February
Uniper announces that it will cut its dividend significantly from last year and will only distribute the minimum amount required by law. The company justifies this with “surprising costs”, which fluctuations in energy prices and the tightening of the gap between Russia and the West can cause for it.
Russia invades Ukraine on February 24th. Fortum and Uniper’s shares plummet on the stock market.
March
The Nord Stream 2 gas pipeline project between Russia and Germany goes on hold, and Uniper has to write down its financing receivables from the project. The company has been one of the European financiers of the project with a share of 950 million euros.
April
Uniper issues a profit warning. The company says that it expects its result to weaken significantly in January–March 2022 compared to the comparison period. At this point, Uniper’s net result for the beginning of the year is already three billion euros in loss.
May
Uniper says that its net debt increased more than sixfold in the first quarter of the year. The company has a debt of more than two billion euros. At the same time, Uniper’s net loss for the beginning of the year rises to 615 million euros.
June
Russian gas deliveries to Germany will be significantly reduced in mid-June. This drives Uniper into even deeper difficulties, as the company is one of Europe’s largest buyers of Russian natural gas.
Uniper says it will withdraw its profit guidance for 2022. At the same time, it reveals that it is having discussions with the German government about possible state support measures to secure the company’s solvency in the ever-tightening situation of the gas market.
It is reported that the German government is planning a nine billion euro rescue package for Uniper.
July
Uniper’s share price has fallen by 75 percent during the beginning of the year. Calculated at the company’s current stock exchange rate, the value of the Uniper shares owned by Fortum is only about 2.8 billion euros. The price of Fortum’s own share has fallen by about 50 percent in six months.
The European gas crisis pushes Uniper into ever tighter conditions. Fortum may lose a significant part of its controlling power in Uniper if the German government decides to nationalize the company.
Uniper announces in its stock exchange release that it is applying for the support allowed by German legislation in order to stabilize its situation. In the same press release, Fortum presents the splitting of Uniper in such a way that the business operations central to the German energy system are separated from Uniper’s other operations and owned by the state.
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