Owner control | Experts praise the Uniper agreement as a “god’s good deal” for Finland

In listed companies, the state must always think of the best interests of each shareholder, reminds Jyri Häkämies, CEO of EK, who served as the first Minister of Ownership.

Germany nationalizes the energy company Uniper, buys the rest of its Uniper shares from Fortum and gives back the eight billion euro financial responsibilities it gave to the state.

How did the Finnish state and Fortum fare in the agreement with Germany? Helsingin Sanomat asked experts from different fields about it.

Risto Murto: The Uniper agreement reached was close to the best possible

Pension company CEO of Varma Risto Murto estimates that from the point of view of the Finnish state and Fortum the agreement was as good as was possible under the circumstances.

“Taking into account the difficult starting point and Uniper’s crisis-ridden situation, this was as close as possible to saving a company in crisis and, in principle, ripe for bankruptcy,” Murto estimated.

After the state of Finland, Varma is Fortum’s largest owner with a 1.26 percent ownership stake. The Finnish government owns 50.76 percent of Fortum.

Fortum and the state will get back the eight billion financial responsibilities they gave to Uniper in July.

“Uniper’s share price had already fallen, and its role in the agreement was smaller.”

CEO of Varma, Risto Murto

In public it has been suggested that Fortum should have negotiated at the same time about breaking up Uniper so that Fortum would have bought Uniper’s Swedish nuclear and hydropower plants.

According to Murro, it would have needed a valuation of these parts and the ability from Fortum to make such an investment.

When Germany was hardly ready to sell off these profitable units in a hurry, and Fortum now has no funds for a large investment, the option that Fortum received that it would be a buyer candidate in the future was, according to Murro, all that was realistically available.

Burglary predicts that the political debate surrounding Fortum will fade away after the Uniper laundry.

“After the Russian solutions, Fortum is the Nordic emission-free energy producer, whose business is exceptionally profitable right now.”

“As a wake-up call, the role of the state as owner may once again enter the discussion.”

In Murro’s opinion, it is impossible to build ownership control in such a way that government ministers would constantly discuss the strategic decisions of listed companies.

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“I understand it in terms of key big decisions, but more broadly, it is impossible for politicians to intervene in decisions.”

Burglary reminds that the state has built the asset management company Solidium because the difference between ownership and political decision-making would be clearer.

In Murro’s opinion, it should also be considered whether the state should reduce its holdings in companies.

“It is a structurally wrong direction that the state has increased holdings in listed companies in recent years. At the same time, a minefield is being built for future encounters between economy and politics.”

Eero Heliövaara: The state could fully own its energy company

“For the state in his sole role as owner did not fare well in the Uniper agreement, I guess that can be said with certainty. At least 6.5 billion euros and Uniper’s future profits will be lost,” says the head of the government’s ownership steering department in 2013-2017 Eero Heliövaara.

He has previously also served as CEO of Pohjola and SRV.

In Heliövaara’s opinion, it would be good to think more broadly about whether the state is a good owner of listed companies in general.

In energy companies, the state’s role could be that it owns them one hundred percent.

“Of course, these companies can also own Nordic energy companies, which form a logical whole.”

Eero Heliövaara served as the head of the ownership steering department appointed by the Minister of Ownership Steering Heidi Hautala (green) for one five-year term.

Noise hazard was the head of ownership management on September 20, 2017, when Fortum’s intentions to buy Uniper became public as a leak. The Uniper deal was already completed on September 26.

“When I heard about it, I didn’t even know what Uniper was,” Heliövaara remembers.

In his opinion, it is completely unreasonable to think that any minister or official would have the ability to challenge the company’s management’s proposal at that time.

“At that time, you could do nothing but trust the decision of the company’s management and its board.”

“There is a lot of hindsight. Even though Crimea was occupied, not many of us thought at the time that such a huge chain of events would start.”

Jyri Häkämies: In listed companies, one must always think of the best interests of the company

“One the measure of the success of Fortum’s Uniper agreement is the market”, says the CEO of the Finnish Confederation of Business and Industry (EK) Jyri Häkämies.

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Fortum’s closing price rose by 9.5 percent on Wednesday, meaning that the market considered the negotiation result good for Fortum.

Häkämies served as Finland’s first Minister of Ownership in 2007–2011.

He estimates that the assignment increased his understanding of how taking the company to the stock exchange affects the decision-making in the company.

“If we seek money from the market for growth by listing on the stock exchange, we are at the same time committing to the fact that everyone has the right and duty to promote the interests of the entire company.”

In Häkämie’s opinion, one of the biggest biases in the current discussion about state ownership is that it is often desired that the state, as the majority owner, should be the only one to determine the company’s actions.

EK’s CEO Jyri Häkämies was the minister of ownership control at the same time he was the minister of defense.

Pami Aalto: The mess will hardly affect the relationship between Germany and Finland

To Tampere the university’s Jean Monnet professor and head of the political research unit Pami Aalto believes that the Uniper mess can raise political pressure to tighten ownership control. According to Aalto, ownership control in Finland is lax compared to, for example, Central Europe.

“When people call from abroad and ask what ownership management in Finland is like, there is very little to say. Finland has kept its holdings on a fairly loose leash.”

Aalto’s assessment of the outcome of the Uniper negotiations is quite clear.

“After all, this is a goddamn good deal for Fortum to get rid of Uniper.”

On the other hand, it should have been possible to assess the events of the fall already in July, says Aalto. In July, the parties still assumed that the supply of gas from Russia via the Nord Stream pipeline would continue.

“Yes, you should have seen by then that things have fundamentally changed.”

Fortum agreed in the summer with the German state and Uniper that the German state will become Uniper’s shareholder with a 30 percent share. After a couple of months, however, information began to leak out that Germany was planning to nationalize Uniper, as has happened now.

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So Germany reneged on the agreement. Can the series of events have an effect on the relations between Finland and Germany?

Hardly, says Aalto. He estimates that the political situation in Europe and the energy crisis leave no room for friction in bilateral relations. Germany is currently in a very difficult situation in terms of energy supply and price.

“Finland also has the same problems, but on a smaller scale. I don’t think there is any time to dwell on the relations between Finland and Germany.”

Tampere University’s Jean Monnet professor and head of the political research unit Pami Aalto.

Minna Ålander: Finland was more realistic than Germany in July

Foreign policy of the institute’s researcher Minna Ålander’s according to Germany still had a much more unrealistic picture of the future of Russian oil imports in July than in Finland. At that time, Finland no longer thought that gas imports from Russia would return to the previous level.

“In Germany, the Minister of Economy Robert Habeck said at the beginning of July that everything is possible, and after the annual repair of the Nord Stream pipeline, the gas supply may even increase,” says Ålander.

“In that sense, at least at that time, Finland had a more realistic starting point for negotiations.”

Neither Ålander does not believe that the Uniper mess will affect bilateral relations between Finland and Germany.

“From Germany’s point of view, this is part of a wider energy crisis, and the negotiations between Fortum and Uniper were not in the same focus in the German media as in Finland.”

The war of aggression started by Putin and the energy crisis caused by it have pushed both Finland and Germany into a situation where they are mainly trying to keep their heads above water, Ålander says. That’s why he doesn’t think the case between Uniper and Fortum would really make things worse between the two countries. Miscalculations in energy policy were also made in both countries, he says.

“Probably no one can be particularly proud of themselves in this situation.”

Minna Ålander, researcher at the Foreign Policy Institute.

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