EON SE 
HELSINKI (Reuters) - Shares in Fortum (>> Fortum Oyj) slipped on Thursday on concerns over whether the Finnish power utility would end up with the assets it wanted if it bought a major stake in German counterpart Uniper (>> Uniper SE) from E.ON (>> E.ON).
Following media reports on the proposed deal, Fortum and E.ON confirmed on Wednesday that they were in advanced talks for a deal on the 46.65 percent stake in Uniper, priced at 3.8 billion euros.
Uniper was taken aback by Fortum's planned bid, which the German company said was "unsolicited" and "clearly not in line" with its strategy.
Uniper, which has interests in nuclear and hydropower electricity generation but also a large number of fossil-fuel power stations, is not seen as an obvious fit for Fortum, which is focused on carbon-free power generation.
State-controlled Fortum has been looking for a deal since selling its power distribution grids for 9.3 billion euros in 2014 and 2015.
Sources close to the matter told Reuters that Fortum was
mainly interested in Uniper's hydropower plants and interests in
Swedish nuclear power stations, and it was already working with
a partner that might take on Uniper's coal-fired plants.
Fortum CEO Pekka Lundmark argued on Wednesday that cooperation between Fortum and Uniper "would render significant benefits for all stakeholders", adding that the move would not change the Finnish firm's "clean energy" vision.
The opposition of Uniper management risks complicating the situation although ultimately there is little they can do to prevent a sale by former owner E.ON.
"This is a very, very confusing case altogether, with lots of open questions," said Mika Heikkila, a fund manager at Taaleri, whose fund is a Fortum shareholder.
"They must find some use for the money (from grid divestments). The (offer) price is not too high, but how can they get rid of the assets that they are not interested in?"
Shares in Fortum, which rose 4.2 percent on Wednesday, fell 3.5 percent to 16.31 euros on Thursday, while Uniper's shares rose 1.3 percent to 22.59 euros, having risen more than 5 percent on Wednesday to just above the offer price.
"My take is that this will fall through," said Handelsbanken analyst Karri Rinta, cutting his rating on Fortum shares to a "reduce" from "accumulate".
Nordea Bank also lowered its rating for Fortum, to "hold" from "buy".
"An expected break-up scenario must be the reason Uniper is opposed to a merger with Fortum ... the problem is that Uniper's hydro and nuclear power assets are not for sale separately," the bank's analysts said in a note.
If the deal goes through the state-controlled Finnish company must then - due to German law - extend the offer of 22 euros per share to all other shareholders.
(Editing by Greg Mahlich/Keith Weir)
By Jussi Rosendahl and Tuomas Forsell
