'Business case no longer viable' | Germany fully takes over Uniper from Fortum
Berlin will own 98.5% in near insolvent utility after transaction closes
Germany will take full control of near-insolvent gas trader and utility Uniper that so far was owned by Finland’s Fortum.
Uniper has been building up a renewable power base and is a key player in Europe’s emerging green hydrogen sector, but in recent months had lost billions of euros due to Russia’s curtailment of gas flows to Europe (and Germany in particular) in retaliation to sanctions against the invasion of Ukraine.
Under the divestment deal announced today (Wednesday), the German state plans to underwrite an €8bn ($7.92bn) equity capital increase of Uniper at €1.70 per share, with development bank KfW providing further bridge financing as required to Uniper until the transaction has closed.
Berlin in connection with the capital injection also intends to buy all of Fortum’s shares in the troubled unit at €1.70 per share, totalling nearly €0.5bn.
The German state upon completion will own 98.5% in Uniper, and as part of the agreement pay back a €4bn loan to Uniper Fortum had granted earlier.
“Under the current circumstances in the European energy markets and recognising the severity of Uniper’s situation, the divestment of Uniper is the right step to take, not only for Uniper but also for Fortum,” Fortum chief executive Markus Rauramo said.
“The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio.
“As a result, the business case for an integrated group is no longer viable.”
Previous German interventions in large companies, such as airline Lufthansa, which entered turbulence in the wake of Covid-19 lockdowns, have been successful and actually earned the state large amounts of money in the medium term. That is less likely in the case of Uniper, as the utility’s business model so far has depended to heavily on the import of (formerly) cheap Russian gas.
The parties have also agreed that Fortum will have a right of first offer in case Uniper intends to divest all or parts of its Swedish hydro and nuclear assets until the end of 2026.
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