FRANKFURT/HELSINKI (Reuters) - Germany’s E.ON (EONGn.DE) might have to pay as much as 1.5 billion euros ($1.7 billion) if a deal to sell its stake in Uniper (UN01.DE) to Finnish power group Fortum (FORTUM.HE) falls through, raising the bar for any rival to enter the auction.
To offset the cost of the break fee announced by Fortum on Tuesday, a competing bid would likely have to rise to at least 26.10 euros per Uniper share, or 9.55 billion euros, to win E.ON over. That would be up nearly a fifth on Fortum’s 22 euro-per-share offer, which the Finnish firm said was the maximum.
Shares in Uniper - which opposes Fortum’s bid - currently trade at 23.81 euros, having more than doubled since E.ON spun off the power plant and energy trading business last year. E.ON has agreed to sell its remaining 46.65 percent stake to Fortum.
“We will not raise the offer price. This is our last, best and final offer,” Fortum Chief Executive Pekka Lundmark said in webcast comments after the company published its official takeover offer, which will run until Jan. 16.
“We consider a competing bid highly unlikely.”
Uniper’s Chief Financial Officer Christopher Delbrueck said the company was not aware of any other parties interested in a large stake.
Uniper argues its coal- and gas-fired power plants are not a good fit for Fortum, which is trying to reduce its carbon footprint. Management also fears Fortum might break up Uniper if its takeover bid succeeds and sell off unwanted assets to third parties, something Fortum has denied.
“The bidder has no intention to cause Uniper to relocate its seat away from Duesseldorf, nor does it intend to cause Uniper to relocate or close or dispose of any parts of its business,” Fortum said in its offer document.
Under German takeover rules, Fortum has to make an offer for all of Uniper, whose shares were flat on Tuesday after it said nine-month operating profit fell almost a quarter.
If E.ON does not tender its stake by Jan. 11 as agreed, it may have to pay compensation of up to 1.5 billion euros to Fortum, the Finnish group said.
Uniper Chief Executive Klaus Schaefer said the company would examine Fortum’s offer and comment on it within the next two weeks. He said shareholders should “refrain from accepting” the offer until then.
Additional reporting by Vera Eckart; Editing by Maria Sheahan and Mark Potter