Will E.ON ADR holders Receive Uniper Shares ?

German utility giant E.ON. AG (EONGY) recently spun off its fossil fuel business into a separate company called Uniper SE. US investors in E.ON may wonder if they will receive shares in Uniper.

Here is some background info on Uniper:

Since January 1, 2016, new E.ON and Uniper have been operating as separate legal entities. From now on E.ON will focus on renewables, energy networks, and customer solutions while Uniper will ensure the security of energy supply through its conventional power generation and global energy trading businesses.

At the E.ON Annual Shareholders Meeting in Essen, the company’s shareholders approved the spinoff of a 53.35 -percent majority stake in the Uniper Group to shareholders by a majority of 99.68 percent.

With the publication of the Prospectus a further important requirement for the listing of Uniper has been fulfilled.

On September 9, 2016 the Frankfurt Stock Exchange admitted Uniper SE shares to trading. As planned, the international energy company will be listed on the Frankfurt Stock Exchange’s Prime Standard on Monday, September 12, 2016. Prior to the admission to listing, the spinoff of Uniper from E.ON was entered into E.ON SE’s commercial register.

Source: E.ON 

E.ON ADR holders will not receive shares in Uniper since shares of Uniper SE were not registered under the United States Securities Act of 1933, according to the Citi, the depository for E.ON ADRs.

From a Citi notification:


E.ON SE announced a distribution of One (1) Uniper SE share for every Ten (10) E.ON SE shares held as of ordinary record date. The shares of Uniper SE were not registered under the United States Securities Act of 1933, and therefore Citi was not allowed to distribute the shares to E.ON SE ADR Holders.

As a result, Citi as the depositary has sold the shares of Uniper SE in the local market and will distribute the net proceeds of the sale to the E.ON SE ADR holders.

The books of E.ON SE have been closed for issuances and cancellations from COB September 9, 2016 and will re-open September 26, 2016 COB.

Source: Citi

So ADR holders of E.ON will receive $1.11 in cash for each ADR they own.

Due to the spin-off of Uniper EONGY shares have declined in the past few days. On Friday it closed at $7.27 not far from the 52-week low of $6.93.

Disclosure: Long EONGY

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