SSE and rival Npower, which is owned by Germany’s Innogy, have announced that they intend to merge their British retail energy businesses – a major move that will change the face of the UK’s energy landscape.
SSE on Wednesday said that the deal will lead to the creation of a new, independent company which will be owned by shareholders of SSE, with minority participation by Innogy.
The company will have a customer base of around 11.5 million making it the country’s second largest after Centrica's British Gas.
The deal is subject to shareholder and regulatory approvals and SSE said that it expects the transaction to be completed by the last quarter of next year or the first quarter of 2019.
"We are very proud of what we've delivered as a group over many years; but we have been and remain committed to taking the right decisions in each of our businesses to secure the right outcomes for energy customers and other stakeholders,” said Alistair Phillips-Davies, chief executive of SSE.
"The scale of change in the energy market means we believe a separation of our household energy and services business and the proposed merger with Npower will enable both entities to focus more acutely on pursuing their own dedicated strategies, and will ultimately better serve customers, employees and other stakeholders,” he added.
SSE said that it expects the deal to result in “significant synergies”, largely as a result of capital expenditure savings from a combined IT platform. It said that this would help the combined company to compete more effectively in its markets, ultimately leading to lower costs for customers.
Separately on Wednesday SSE reported an 8 per cent fall in adjusted operating profit for the six months to the end of September, to £586.2m.
It said that these results were broadly in-line with its previously stated expectations that earnings would be lower for this financial year than for last.
