Fortum sells entire Uniper stakes to German govt

Finland's state majority-owned energy giant Fortum announced on Wednesday that it has signed an agreement to sell its entire stakes in the gas importer Uniper to the German government, reported Xinhua.

As part of the deal reached with the German government, Fortum will receive half a billion euros (0.5 billion U.S. dollars) for all its shares in Uniper, as well as its recent 8-billion-euro financing into the company.

"Fortum, the German government and Uniper have signed a further agreement in principle for a long-term solution that will allow the German State to take full control of Uniper to secure energy supply in Germany," Fortum said. "The newly found solution, therefore, involves German State control."

Fortum said in a press release that it would, upon completion of the agreement, divest Uniper and refocus on clean Nordic power generation as its core business.

The company noted that the European energy crisis has worsened since the signing of the initial Uniper stabilization agreement between Germany, Fortum and Uniper in July.

"The European energy crisis has escalated further, and the severity of the situation has made it apparent that the previously agreed stabilization measures are insufficient and difficult to implement," Fortum said in the release. "To date, Uniper has accumulated close to 8.5 billion euros in gas-related losses and cannot continue to fulfill its role as a critical provider of security of supply as a privately-owned company."

After Fortum's statement, the Finnish government said it is, as the majority owner of Fortum, satisfied with the outcome.

Tytti Tuppurainen, minister for the control of state-owned companies, said the board of Fortum has taken the unavoidable decision in an unusually uncertain situation, as the company has to protect its financial position and remain capable of handling its basic business.

"Under the current circumstances in the European energy markets and recognizing the severity of Uniper's situation, the divestment of Uniper is the right step to take, not only for Uniper but also for Fortum," said Markus Rauramo, CEO and President of Fortum. He noted that some earlier strategic decisions by Fortum had not been correct.

The parties have also agreed that Fortum will have a right of the first offer in case Uniper intends to divest all or parts of its Swedish hydro and nuclear assets until the end of 2026.