Major shareholder Fortum is causing tension at Uniper

The abrupt change in leadership at Uniper has met with mixed feedback from analysts. Markus Rauramo, head of the Finnish main owner Fortum, now wants to create clear conditions.

The logo of the group at the Uniper headquarters in Düsseldorf.

Dthe fact that there was a crunch between the Uniper management and the main owner Fortum had already become apparent before the big bang. Nevertheless, the abrupt change in leadership was a bang for the Düsseldorf energy supplier. At the annual press conference in March, CEO Andreas Schierenbeck and CFO Sascha Bibert tried to downplay the public dispute over the dividend policy of the Düsseldorf energy supplier as a “normal voting process”. Three weeks later, the two of them started their job less than two years ago. With the previous chairman of the supervisory board, Klaus-Dieter Maubach, a loyal Fortum follower has been running the company since the beginning of April. Fortum manager Tiina Tuomela is at his side as the new CFO.

After the back and forth of the past few years, Fortum boss Markus Rauramo, who is now taking over the helm on the supervisory board, finally wants a clear situation. Fortum only dismissed the entire board of directors in Düsseldorf in the spring of 2019 because he had resisted the entry of the Finns and fought to maintain independence. The new personnel table reflects the balance of power: The Finnish energy supplier now has a majority share of 76.06 percent. Fortum intends to forego a domination and profit transfer agreement at least until the end of this year. Displacement of the minority shareholders is also not an option for the time being. What comes after that remains open.

Takeover has to pay off

But the expensive majority takeover has to pay off. To this end, the German subsidiary is being put more tightly on the curb and brought on course in order to enable a “deeper integration of functions and business areas” and to leverage “cooperation advantages”. The announcement by Fortum boss Rauramo understandably creates new uncertainty among the approximately 12,000 Uniper employees. The stock exchange initially acknowledged the surprising change in leadership rather skeptically. While the M-Dax has been climbing steadily since the beginning of the month, the Uniper share temporarily ran out of steam after the revision. At around EUR 31.20 most recently, it is still slightly below the all-time high of EUR 32.18 reached at the end of March.

There were two readings among analysts. Deepa Venkateswaran from the American Bernstein Research was rather irritated by the swing, which she complained about as “abrupt and inappropriate”. Finally, in December, Fortum expressed its satisfaction with the cooperation with Uniper. It continues to rate the share as “underperform” with a price target of just EUR 17.50. On the other hand, the analysis company Independent Research rates the move positively, because Fortum binds the German utility more closely to itself. Sooner or later, a squeeze-out of the minority shareholders can be expected, says analyst Sven Diermeier. He has raised his price target slightly to 30 euros and recommends holding the share.

When Uniper was listed on the stock exchange in 2016, many people viewed the stock scheelally. The company is a spin-off from Eon. The energy giant has housed its conventional power plants and international energy trading in it. The supposed “Resterampe” soon developed into a star on the stock market. Since the initial listing at 10.02 euros in September 2016, the price has more than tripled. In 2018, Fortum secured the 47 percent share initially held by Eon and then increased it further. The renewed rise in wholesale electricity prices is providing a tailwind, and Uniper has also shown a good nose for energy trading so far.

Lots of imagination for the future

With the gas activities transferred from Eon – including the co-financing of the Nord Stream 2 Baltic Sea pipeline – Uniper is also one of the leading European gas companies. A wide range of activities related to hydrogen as a climate-friendly energy carrier for industry and the construction of our own wind and solar power plants provide a new imagination. The dividend has been a safe bet so far: at the upcoming Annual General Meeting on May 19, an increase of 19 percent to 1.37 euros per share is to be decided. This means that Uniper will distribute more than 500 million euros to Fortum and the minority shareholders. The share price quickly got over the Corona dent last spring, but then suffered a setback. Since autumn it has been pointing pretty steadily upwards again. The opinion of the analysts is divided. Of the experts listed in a Bloomberg overview, only three now recommend the share as a buy. Ten tend to hold and eight tend to sell.