At an auction on Thursday, Fortum offered the highest price for a 55.29% controlling stake in TGK-10 and will now buy 29% from Russia's electricity monopoly Unified Energy System (UES) for 800 million euros.
"In addition, Fortum has committed to acquiring a further 34-47% stake in TGK-10 through a share issue for 0.9-1.3 billion euros," the Finnish company said on its website.
In the first stage of the deal, to be closed in March 2008, Fortum will obtain 63-76% of TGK-10 shares and voting rights. The Finnish company will later announce an offer to buy the remaining 24-37% from minority shareholders.
The entire sum of 2.7 billion euros necessary for the deal will be funded from long-term bank loans.
"This is a great opportunity to become a significant player in the world's fourth largest energy market...We are very pleased to have successfully taken this strategically important step," said Mikael Lilius, Fortum's President and CEO.
TGK-10 operates in West Siberia's Tyumen Region, the Khanty-Mansi and Yamal-Nenets autonomous areas, and the Chelyabinsk Region in the southern Urals.
Andrei Shishkin, TGK-10 director general, said that the company's current capacity of 2,785MW could double by 2012.
