Germany is to nationalise gas giant Uniper in an effort to secure energy supplies amid the war in Ukraine.
The deal will see the government take on a 98.5% stake in the firm at a cost of just over £7.4billion.
Germany is Europe's biggest importer of Russian gas, and has been particularly squeezed as Russia has reduced supplies in recent months.
Chief executive Klaus-Dieter Maubach told the BBC the deal would help Uniper's role as "a system-critical energy supplier".
Before Russia invaded Ukraine, it supplied Europe with about 40% of its natural gas - and it has responded to Western sanctions by gradually cutting off supplies.
At the start of this month, Russia halted gas flowing through the Nord Stream 1 pipeline, claiming repairs were needed - but later said flow would not resume until sanctions were lifted.
Biggest buyer
Uniper, which operates gas, coal, and hydro plants across Europe and is currently controlled by Finnish energy company Fortum, was the biggest buyer of Russian gas in Germany.
In recent months, it had to replace Russian supplies with alternatives from the open market, where prices have soared.
Fortum said Uniper had accumulated close to £7.4billion in gas-related losses "and cannot continue to fulfil its role as a critical provider of security of supply as a privately-owned company".
"The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio," Fortum chief executive Markus Rauramo said.
"As a result, the business case for an integrated group is no longer viable."
The price of shares in Uniper, which also owns the coal-fired Ratcliffe-on-Soar power station in Nottinghamshire, has fallen by more than 90% in the past year.
Injecting £7billion
Under the terms of the deal, the German Government will buy Fortum's shares in Uniper for £437million and inject £7billion of cash into the business.
Some assets in Russia will also come under Germany's control, a government spokesperson said, adding that it was still being decided what would be done with them.
The government had already agreed to take on a 30% stake of Uniper as part of a bailout agreement in July.
Earlier this month, it also entered discussions with another major gas supplier, VNG, over a possible bailout package.
Despite the loss of Russian supplies, Germany had succeeded in filling its gas-storage facilities to more than 90% capacity ahead of winter.
FTSE 100
The UK's top share index, the FTSE 100, was down 69 points at 7,167 shortly after opening this morning, following yesterday's 44-point gain.
Brent crude futures were 0.17% higher at $90 a barrel.
Companies reporting today
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