* Fortum to pay 2.3 bln euros for activist stakes
* Move would bring it closer to full ownership of Uniper
* Uniper shares down 9%, Fortum up 1%
(Adds comments from Fortum CEO, details on agreement)
By Anne Kauranen and Christoph Steitz
HELSINKI/FRANKFURT, Oct 8 (Reuters) - Fortum is
set to gain control of Uniper by acquiring the stakes
of activist funds Elliott and Knight Vinke, a step
that could end a long-running deadlock over ownership of the
German energy firm.
The Finnish state-controlled utility has been seeking
control of Uniper since 2017 but the German company's top
management had opposed a full takeover, warning it could result
in a break-up and threaten the firm's credit rating.
If approved by regulators, the agreement between Fortum and
the two activist funds would simplify the complex ownership
structure that has made resolving the stand-off difficult.
As part of the deal, Fortum would pay 29.93 euros per share
for the combined stake of more than 20.5% held by the two funds.
This equates to a price of 2.3 billion euros ($2.5 billion) and
will raise Fortum's Uniper stake to more than 70.5% from 49.99%.
Uniper, Knight Vinke and Elliott all declined to comment.
Shares in Uniper fell 9% to 27.22 euros per share after
Fortum said it would rule out any domination agreement, profit
and loss transfer agreement or squeeze-out of minority
shareholders for at least two years. Fortum's stock rose 1%.
"It has been Fortum's preference to agree with Uniper on a
joint path forward, yet discussions have each time ended short
of actions," Fortum said, though it added that talks with
Uniper's management over the past months have been "very
constructive".
Fortum said it was convinced that the change in Uniper's
ownership structure and the resolution of the complex
relationship would bring stability and return its focus to
business matters.
The agreement still needs to be cleared by the United States
and Russia. Russian regulators have so far capped Fortum's
ownership in Uniper at 49.99% due to a strategic water licence
operated by the German firm's local subsidiary Unipro.
Fortum Chief Executive Pekka Lundmark told analysts that
discussions with Russian regulators over the past months have
"led us to believe that there is a solution available to the
issue".
"We would not have taken this step unless we (were) quite
confident that an approval could be obtained. Now, as to the
details of what the content of that decision would be, that I am
not able to speculate more on," he added.
Fortum said it had made a preparatory filing to the Russian
Federal Antimonopoly Service (FAS), and said it expected the
transaction to close by the end of the first quarter of 2020.
"Uniper's Russian water business is likely to be a key area
of concern where countermeasures may be necessary," Bernstein
analysts said. "However, we think it is unlikely that Fortum
would make this move without having had some plan in place."
An FAS spokesman said the regulator had been notified about
Fortum's bid to buy Uniper, but did not provide further details.
Hoping to win over workers, Fortum also pledged to honour
all existing collective bargaining agreements at Uniper, and
said it would not cause the German group to implement forced
layoffs or relocate its headquarters away from Duesseldorf.
Credit Suisse said in a note that the deal was positive for
Fortum, as it will deliver synergies and help to resolve the
deadlock.
Fortum said it would fund the deal with existing cash
resources and credit facilities underwritten by Barclays
.
($1 = 0.9111 euros)
(Additional reporting by Boleslaw Lasocki in Gdansk, Arno
Schuetze in Frankfurt, Tom Kaeckenhoff in Duesseldorf and
Anastasia Lyrchikova in Moscow; Editing by Louise Heavens,
Edmund Blair and Jan Harvey)