Ad­vi­sors op­pose call for Uniper stake sale probe

Viet Nam News - - MARKETS -

FRANK­FURT/DUES­SEL­DORF — Share­holder ad­vi­sory groups and a top-10 in­vestor in Uniper have backed the util­ity’s man­age­ment as it seeks to fend off calls for an in­ves­ti­ga­tion into whether it sought to block the sale of a ma­jor stake in the com­pany.

Their sup­port deals a blow to Corn­wall Luxembourg S.a.r.l., a fund backed by ac­tivist in­vestor El­liott, which had called for the in­ves­ti­ga­tion into the planned sale of E.ON’s re­main­ing 46.65 per cent stake to For­tum.

In­sti­tu­tional Share­holder Ser­vices (ISS), the world’s lead­ing share­holder ad­vi­sory group, Glass Lewis and Odey As­set Man­age­ment all rec­om­mended share­hold- ers vote against the mo­tion, ac­cord­ing to notes and com­ments sent to Reuters.

The vote, to take place at Uniper’s an­nual share­holder meet­ing sched­uled for June 6, will de­cide whether a spe­cial au­di­tor will be ap­pointed to iden­tify pos­si­ble breaches of duty by Uniper’s board in re­la­tion to For­tum’s proposed ac­qui­si­tion.

For­tum, which is await­ing reg­u­la­tory ap­proval to buy E.ON’s stake in Uniper, said in late April that Uniper had ac­tively worked against the proposed trans­ac­tion.

Uniper has op­posed the deal but last week de­nied it had tried to un­der­mine it.

“A spe­cial au­dit is an un­nec­es­sary dis­trac­tion. All it can reveal is con­fi­den­tial dis­cus­sions but it can­not af­fect any out­come,” Crispin Odey, founder of Odey As­set Man­age­ment, said, adding it would dis­tract man­age­ment from do­ing their job.

“We can see no merit in this mo­tion and would urge oth­ers to vote against it, too.”

Odey As­set Man­age­ment holds a 1.56 per cent stake in Uniper, mak­ing it the group’s fifth-largest share­holder.

ISS, in a note to clients that was sent to Reuters, said Corn­wall had failed “to pro­vide a com­pelling ra­tio­nale for the spe­cial au­dit”, adding there was no clear ev­i­dence of di­rec­tor wrong­do­ing in re­la­tion to the trans­ac­tion.

Corn­wall’s mo­tion came af­ter Rus­sian au­thor­i­ties ap­proved For­tum’s pur­chase of up to, but not more than, 50 per cent of Uniper, deny­ing it a con­trol­ling stake and deal­ing a blow to hedge funds that hoped for a higher fol­low-up bid.

Knight Vinke and El­liott Man­age­ment have both dis­closed hold­ings in Uniper - of 5.02 per cent and 7.38 per cent, re­spec­tively.

“While we be­lieve that some share­hold­ers ... will be frus­trated with the cur­rent reg­u­la­tory sit­u­a­tion in Rus­sia ... we do not be­lieve that there is sub­stan­tial ev­i­dence to sug­gest that the man­age­ment board has breached its du­ties in con­nec­tion with the takeover of­fer,” Glass Lewis said in a note.

Much will de­pend on how E.ON votes, as its large stake can sway the out­come. If the com­pany ab­stains from the vote, it would raise El­liott’s chances of se­cur­ing a ma­jor­ity.

A spokesman for E.ON de­clined to com­ment and re­ferred to re­marks by its CEO last week, who said E.ON would lis­ten to all sides be­fore de­cid­ing whether or not to sup­port the mo­tion, adding he was not overly con­cerned about it.

Knight Vinke and fel­low share­hold­ers Black­Rock, Deka and Union In­vest­ment all de­clined to com­ment. El­liott had no im­me­di­ate com­ment. — REUTERS

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