Eon, the German energy giant, is in discussions to sell its stake in Uniper, the fossil fuel and trading company, to Finnish utility Fortum for €3.8bn.
It was confirmed the Eon, the parent of Big Six supplier, that it is in advance discussions regarding a €22-a-share offer for the 45pc stake. To ring-fence its struggling power assets, Eon has spun off Uniper.
The cash offer of Fortum is the group’s second play for the company and comes at a 4.5pc premium to Tuesday’s close. In response, the share price rose over 5pc on the Frankfurt stock exchange in response.
At the start of 2016, Uniper listed as a separate company at around €10 a share. However, it had already surged to around €20 per share over the summer in anticipation of a bid for a takeover.
Even though the strategic rationale of the deal “isn’t obvious,” analysts at Jefferies stated that it could be taken as a display of confidence in the troubled European power generation market.
The spin-off holds the former hydroelectric and coal- and gas-fired plants of Eon, and stakes in the nuclear power sites and gas pipelines. The split was intended to unshackle the stronger business areas of E.on that are concentrating on renewable energy, consumers, and power networks from the struggles encountered by conventional power.
It has become more difficult for power plants in recent years to turn a profit without the help of government support schemes since the roll-out of subsidised renewable energy has prompted wholesale power market prices to slide steadily.