By Edward Taylor and Tom Käckenhoff
FRANKFURT (Reuters) - Uniper should explore a deeper break-up to overcome antitrust hurdles that have prevented Finland's Fortum from taking full control of the German utility, activist investor Knight Vinke said on Monday.
Knight Vinke wants Uniper's management to table a motion at the May 22 annual shareholder's meeting to prepare a spin-off of Unipro, a major Russian utility, according to a letter to Uniper's management board seen by Reuters on Monday.
Finnish state-backed Fortum has since 2018 accumulated a 49.9 percent stake in Uniper, but Russian authorities have stopped it from gaining full control, arguing that a water-testing license owned by Unipro cannot be majority owned by a foreign state entity.
The power struggle has created tensions at Uniper, and its chief executive and finance chief, who had both openly opposed Fortum's takeover plan, said in February they would step down in August.
"We and other shareholders are very concerned at the state of quasi-paralysis caused by Uniper and its largest shareholder being unable to agree on a strategy for the company for more than a year," Knight Vinke said in the letter.
Knight Vinke holds a 5.02 percent stake in Uniper. The letter, dated April 18, 2019, and addressed to the Management Board of Uniper, demands a response from Uniper by April 26.
Knight Vinke's letter said Uniper should legally separate Unipro by splitting off the International Power business of which Unipro is part, or consider a legal separation of Uniper's hydroelectric and nuclear power generation assets in Sweden, Sydkraft AB, the letter showed.
Uniper said its board of management will assess the request and will prepare a statement in due course.
Another activist investor, Elliott, which has amassed a 17.84 percent stake in Uniper, has separately demanded that Uniper's management enter into negotiations with Fortum.
Knight Vinke said it may vote at the annual general meeting for motions tabled by other shareholders.
"We confirm that it is our intention to vote in favour of
all reasonable resolutions, and not only our own, that help Fortum and Uniper reach agreement," the letter said.
(Reporting by Edward Taylor and Tom Kaeckenhoff; Editing by David Holmes)