1st Mar 2016 07:28
LONDON (Alliance News) - Severn Trent PLC and United Utilities Group PLC on Tuesday outlined plans to combine their non-household water and wastewater retail businesses through a joint venture.
The pair of FTSE 100-listed utility firms said the joint venture will primarily comprise of billing and customer service activities and will be centrally located in Stoke-on-Trent.
"United Utilities and Severn Trent have strong track records in operating and growing successful non-household retail services in Scotland," the pair said in separate statements.
"With the non-household retail market in England opening for competition in 2017, this joint venture will combine the complementary skills of both companies, including sales, customer service, business strategy and credit management, to deliver an attractive proposition for large and small business customers across England and Scotland," they added.
The two companies said they hope to create synergies and a cost-effective operation through the venture, which will also help in improving customer service and growth.
Based on the accounts of both companies, before allowing for any financing or synergy effects, the joint venture operation would have had sales of around GBP940.2 million and a pretax profit of GBP9.7 million in the year ended March 31.
Sue Amies-King, the current business retail director of United Utilities, will head up the venture whilst Stuart Howell, the head of finance at Severn Trent, will be the chief financial officer of the new operation.
Severn Trent will pay GBP3.5 million in order to create the 50/50 joint venture and will share the cost of systems development necessary for the provision of non-household retail services. United Utilities did not state whether it would contribute to the costs of setting up the venture.
The pair need to get approval from the UK Competition & Markets Authority, which they hope will be secured in Spring.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
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