March 21, 2019 / 7:18 AM / 2 months ago

Elliott calls for shareholder vote on Uniper 'domination' agreement

FRANKFURT (Reuters) - Activist investor Elliott has called for a shareholder vote to instruct management of German utility Uniper to enter talks on giving one of the latter’s biggest investors the right to control it without having a majority of its shares.

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

Elliott, Uniper’s second-largest shareholder with 17.84 percent, wants the so-called domination agreement to be discussed at the group’s next annual shareholders’ meeting on May 22, it said.

It added on Thursday it would otherwise ask for an extraordinary general meeting on the proposal to give top investor Fortum the domination rights.

Elliott’s proposal comes a month after Uniper and Fortum announced fresh cooperation talks in an attempt to repair their relationship, which has been strained ever since the Finnish state-owned group launched a hostile takeover attempt in 2017.

Fortum last year acquired a 47 percent stake in Uniper from E.ON, which it recently raised to 49.99 percent. Uniper has argued it would be more successful as an independent company.

For now, Fortum cannot raise its stake further, after Russian regulators ruled it is limited to hold less than half of Uniper because of a strategic water testing license owned by Unipro, Uniper’s Russian unit.

That has restricted Fortum’s influence on the company’s strategy. Any domination of the company and its cash flows would need to be approved by 75 percent of the shareholders present at a shareholder meeting.

While the combined stake of Fortum and Elliott only adds up to 67.83 percent, that would likely be enough given traditional attendance rates at shareholder meetings. At Uniper’s past two general meetings, shareholder turnout averaged about 74 percent.

Reuters reported in November that Elliott could use its stake to force Uniper’s management to enter talks over a domination agreement.

“Elliott believes the thus-far ill-defined and ambiguous nature of the relationship between Uniper and Fortum has created an unsatisfactory and unsustainable dynamic, which is detrimental to Uniper,” the investor said in a statement on Thursday.

Reporting by Arno Schuetze and Christoph Steitz; Editing by David Holmes

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