HELSINKI (Reuters) - Shares in Fortum (HE:FORTUM) fell back on Thursday as investors turned doubtful as to whether the Finnish power utility would succeed in buying a near 47 percent stake in German counterpart Uniper (DE:UN01) due to Uniper's opposition to a takeover.
Shares in Fortum, which rose 4.2 percent on Wednesday, were down by 4.6 percent at 16.12 euros by 1020 GMT, when Uniper's shares were up 0.45 percent at 22.40 euros, having risen more than 5 percent on Wednesday to just above the offer price.
E.ON's shares were down 2.2 percent at 9.25 euros, having closed up 3 percent on Wednesday.
"As Uniper's management considers Fortum's bid ... as hostile, and Fortum acknowledges that it does not expect to gain control of the company in the foreseeable future, we view the proposed transaction as unattractive," said Handelsbanken analyst Karri Rinta.
"My take is that this will fall through. Fortum won't even buy the minority stake," he said in 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.
Fortum said on Wednesday it was in talks to pay 3.8 billion euros (£3.35 billion) for E.ON's
If the deal goes through the state-controlled Finnish company must then extend the offer of 22 euros per share to all other shareholders.
Uniper, which has interests in nuclear and hydropower electricity generation but also a large number of fossil-fuel power stations, is seen as a difficult strategic fit for Fortum, which is focused on carbon-free power generation.
Sources close to the matter said that Fortum was already working with a partner that might take on Uniper's coal-fired plants.
Uniper was taken aback by the news of Fortum's planned bid, which the German company said was "unsolicited" and "clearly not in line with the strategy of Uniper's strategy".
Fortum has been hunting for acquisitions ever since it sold its Nordic power distribution grids for 9.3 billion euros and promised two years ago to put the money to better use.
"This (the bid for E.ON's Uniper stake) 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. The price is not too high, but how can they get rid of the assets that they are not interested in?"