13th Sep 2019 07:39
(Alliance News) - FTSE 100 utility SSE PLC has agreed a sale of its Energy Services business, it said Friday, after a long-drawn-out process to find a future for the unit.
Energy Services provides energy to UK householders, under brands such as SSE, SSE Scottish Hydro, SSE Southern Electric, and SSE Swalec.
Ovo Group Ltd is the buyer, at an enterprise value of GBP500 million, made up of GBP400 million in cash for SSE and GBP100 million worth of loan notes.
Ovo had been named by SSE as a potential buyer in August. Ovo's purchase will make it one of the largest energy suppliers in the UK, just a decade after its founding.
SSE expects the deal to complete either towards the end of 2019 or early in 2020, subject to necessary regulatory approvals. It will use the proceeds to reduce debt.
SSE Chief Executive Alistair Phillips-Davies commented: "We have long believed 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 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," he continued.
"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."
A potential sale of the business was announced in May, after Energy Services lost over half a million households to other suppliers during its financial year ended March 2019. As well as a sale, a spin-off and listing had been considered.
SSE has been trying to sort a future for Energy Services for over a year. In December 2018, SSE pulled plans to merge the business with Innogy SE's npower, after the two were unable to come to terms.
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