SSE and Innogy in talks to merge United Kingdom retail energy supply businesses

Marcus Newton
November 8, 2017

SSE said the proposed transaction, involving a demerger of its United Kingdom supply business from its production and distribution operations, would create a new stock market listed company.

As the cap is aimed at standard variable tariffs and default tariffs, it is expected to threaten the profits of some of the larger suppliers.

For the retail gas market, SSE has an 11 percent market share and npower 8 percent, with Centrica on 33 percent.

"At first glance it's hard to see how the regulator would let this one through", said Neil Wilson, senior market analyst at ETX Capital.

While talks are "advanced", no final decisions have been taken "and no binding agreements regarding the terms of any combination have been entered into", said the firm.

SSE said the combined business would be listed in its own right and SSE would demerge its shares to shareholders.

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"A deal may face some tough questions from the regulator but they must think it's achievable", said Peter Atherton, an associate at consultancy Cornwall Insight.

Two of the UK's biggest energy companies, SSE and npower, have announced plans to merge their residential supply business.

The move is likely to raise concerns over competition in the United Kingdom residential market, reducing the number of big players - controlling 80% of supply - from six companies to five.

All have also come under recent pressure from smaller rivals who have been taking customers and market share. "The answer is probably not", an industry source said, speaking on condition of anonymity.

When introduced, which is not likely until next winter at the earliest, it would be the biggest energy market intervention for 30 years.

Other reports by MaliBehiribAe

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