June 11, 2018 / 3:47 PM / 6 days ago

Exclusive: Fortum set to gain EU antitrust approval for Uniper deal - sources

BRUSSELS/FRANKFURT (Reuters) - Finnish utility Fortum (FORTUM.HE) is set to gain unconditional EU approval to acquire a 46.65 percent stake in German energy group Uniper (UN01.DE) from E.ON (EONGn.DE), three people familiar with the matter said on Monday.

FILE PHOTO: A logo of German energy utility company Uniper SE is pictured in the company's headquarter in Duesseldorf, Germany, March 8, 2018. REUTERS/Thilo Schmuelgen/File Photo

State-controlled Fortum’s bid has run into opposition from Uniper, which said that the combination would make little sense given its heavy exposure to gas and coal-fired power plants while Fortum’s focus is on clean technologies.

Approval by the EU would mark a major step toward the deal’s completion, which also still requires regulatory clearance from Russia, where Uniper operates several assets through its subsidiary Unipro (UPRO.MM), to go through.

The European Commission is scheduled to rule on the 3.8 billion euro ($4.5 billion) deal, first agreed by Fortum and Germany’s E.ON in September, by June 15.

The Commission, Fortum, E.ON and Uniper all declined to comment.

Last week, Uniper Chief Executive Klaus Schaefer said he would defend the energy group’s independence, suggesting a full takeover of the company would not be possible with him in the driving seat.

The remarks came after months of resistance during which Schaefer repeatedly questioned the proposed transaction, calling it hostile and doubting the offer’s strategic merit on fears that Fortum might aims for a break up of the company.

FILE PHOTO: A general view of the Fortum headquarters in Espoo, Finland August 18, 2017. Picture taken August 18, 2017. REUTERS/Lefteris Karagiannopoulos

Fortum has denied it plans to do so.

In a preliminary assessment, Russian authorities in late April allowed Fortum to buy up to, but not more than, 50 percent of Uniper, dealing a blow to hedge funds that bought stakes hoping the Finnish group might launch a higher follow-up bid.

Activist investors Knight Vinke and Elliott Management have both disclosed holdings in Uniper — 5.02 percent and 8.03 percent, respectively.

Fortum’s Chief Executive Pekka Lundmark has claimed that Uniper’s management has actively worked against the planned transaction in Russia, which Uniper has denied.

Cornwall Luxembourg S.a.r.l., a fund controlled by Elliott, has raised similar concerns and had aimed to appoint a special auditor to look into the matter to establish whether Uniper’s management has breached its duties.

    At Uniper’s annual shareholder meeting last week, E.ON proposed to delay the vote, which was accepted by Elliott-controlled funds, effectively pushing back the vote to the group’s next general meeting.

    Additional reporting by Jussi Rosendahl in Helsinki; Editing by Julia Fioretti/David Evans

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