Update: market statement
SSE in talks to sell energy retail business to challenger Ovo
SSE is seeking to offload the domestic division
UPDATE 12th: One of Britain’s new generation of energy companies is tipped to acquire the electricity and gas supply business of giant utility firm SSE.
Perth-based SSE confirmed (12th) that it is in talks to sell its household supply division to Ovo Energy, founded by Stephen Fitzpatrick a decade ago.
The deal involves a £250 million upfront payment, followed by further payments. Ovo would add SSE’s 5.7m domestic accounts to its 1.5m putting it second only to British Gas, which has 12m domestic accounts.
It would represent a remarkable rise of a challenger company in the sector and a remarkable change of fortune following the collapse of around a dozen smaller operators.
Only last week, in an agreement with regulator Ofgem, SSE took on 800 domestic gas customers of Cardiff Energy Supply which is ceasing to trade.
Earlier this year, Mr Fitzpatrick sold a 20% stake in Ovo to Mitsubishi, the Japanese industrial company, while Mayfair Equity Partners owns a minority stake.
The Ovo deal would pave the way for SSE’s exit from the challenged UK energy retail market after an earlier aborted attempt to set up a joint venture with nPower.
Since then the company has announced that a sale or seeking a separate listing on the London Stock Exchange were under consideration.
In a statement to the stock market (12th) SSE said: “SSE is actively progressing a number of options for the future of SSE Energy Services, having determined that its best future lies outside the SSE group.
“In line with this, and noting recent media speculation, SSE plc can confirm it is in discussions with Ovo Group over the possible sale of the SSE Energy Services business, which supplies energy and related services to around 5.7 million household customers across Great Britain.
“These discussions are continuing, however no final decisions have been taken and no agreements regarding the terms of any transaction have been entered into.
“The board remains focused on securing the best long-term future for the business, its customers and employees, and for shareholders.”