Two activist investors have decided to withdraw their proposed resolutions to break the deadlock over Fortum Oyj's planned takeover of Uniper SE. Uniper shareholders were supposed to vote on the proposals May 22 during their annual general meeting.
Finland-headquartered Fortum is currently blocked from owning more than 49.99% in Uniper due to a regulatory ruling in Russia aimed at protecting a strategic water testing license in the country owned by a Uniper subsidiary.
Fund manager Elliott Management Corp. proposed that Uniper management prepare a lawful domination agreement with Fortum. This would allow Fortum to gain control over the management of Uniper despite being a minority owner.
On the other hand, Knight Vinke Asset Management LLC proposed to split off Uniper's Russian generation business to resolve the issue.
In a May 21 statement, Fortum said it had made progress in talks with Germany-headquartered Uniper over future cooperation. Fortum had reportedly reached a deal with Elliott and Knight Vinke, committing to gain majority control of the company.
While these motions have been dropped, Fortum said it will vote against a separate proposal initiated by Elliott to nominate a special auditor at Uniper, seeing it as an additional burden to the company and its management. Fortum also noted that it prefers that the vote on discharging the Uniper management board for 2017 and 2018 be postponed until its concerns are addressed.
"I look forward to working with the reconstituted management team once the new CEO and CFO are in office," Fortum President and CEO Pekka Lundmark said in the statement. "The remaining concerns need to be addressed and further progress must be made on putting into action a shared vision for our companies."