Fortum to go to court over dispute over option to buy E.ON Finland

German parent company refuses to recognise Fortum's right to buy

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The Finnish state-owned energy company Fortum plans to bring a dispute over its plans to buy the electricity supplier E.ON Finland, formerly Espoo Electricity, before an international court of arbitration.
      Fortum announced on Tuesday that it is asserting its right to buy out the holding of the German E.ON concern, comprising 65.6% of the company, for EUR 390 million. Fortum says that it got the option when it sold E.ON a company that it owned in Wesertal, Germany in 2002.
     
E.ON told Fortum on Tuesday that it cannot sell its shares, because of terms in a contract that it has with the City of Espoo. The city has a 34.2% holding in E.ON Finland.
      Fortum said on Tuesday that it is calling for the establishment of a court of arbitration to settle the matter. Under the procedure, Fortum and E.ON will name one person each to a court of arbitration, and these two will name a judge for the proceedings.
      The process will follow Finnish corporate law, and therefore, the members of the panel are likely to be Finns.
     
In the administration of the City of Espoo the dispute over the ownership of the company is considered finished, after E.ON said that it wants to remain a joint owner of the company along with the city. The company also reiterated that it wants to remain on the Finnish electricity market.
      Fortum has offered to buy Espoo's shares in E.ON Finland for EUR 257 million. The city does not plan to handle the offer now that E.ON is not willing to give up its holding in the company.
      Nevertheless, Fortum reiterated the view on Tuesday that it was in a strong position, and said that it expected to win the dispute.


Previously in HS International Edition:
  Fortum wants to buy Espoo electric utility (18.1.2005)

Links:
  Fortum press release 25.1.2005: Fortum reasserts its call option over E.ON Finland shares

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