Ovo Energy has agreed a £500m deal to acquire SSE’s retail business, making it the UK’s second-largest energy provider with approximately five million customers.
The deal comprises £400m cash and £100m in loan notes and is expected to complete in late 2019 or early 2020.
Ovo is already the UK’s largest independent energy supplier, with 1.5 million customers and around 2,000 employees. It will now take on SSE’s 3.5 million customers and 8,000 staff, making it second only to British Gas.
Earlier this year, it secured investment from Mitsubishi Corporation.
Customers will be unaffected after completion of the transaction, SSE said, and Ovo will operate the SSE brand under licence for a limited period to allow a “phased and carefully-managed transition and continued high standards of customer service”.
Ovo chief executive Stephen Fitzpatrick said: “This transaction marks a significant moment for the energy industry. Advances in technology, the falling cost of renewable energy and battery storage, the explosion of data and the urgent need to decarbonise are completely transforming the global energy system.
“For the past three years Ovo has been investing heavily in scalable operating platforms, smart data capabilities and connected home services, ensuring we’re well positioned to grow and take advantage of new opportunities in a changing market.
“SSE and Ovo are a great fit. They share our values on sustainability and serving customers. They’ve built an excellent team that I’m really looking forward to working with.”
Alistair Phillips-Davies, chief executive of SSE, said: “We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders – and this is an excellent opportunity to make that happen. Ovo shares our relentless focus on customer service and has a bold vision for how technology can reshape the future of the industry. I’m confident that this is the best outcome for the SSE Energy Services business.
“Following the transaction, SSE will be able to give an even greater focus to delivering the low carbon infrastructure needed to help the UK reach net zero emissions. We have a clear strategy around developing, operating and owning renewable energy and electricity network assets, along with growing businesses complementary to this core. With a large and growing renewable energy pipeline and a leading position in the electricity networks needed to deliver low-carbon energy reliably to homes and businesses in an increasingly electrified economy, we are well placed to create value from the low-carbon transition.”