Big Six supplier SSE has sold its energy services business to rival OVO Energy in a £500 million deal which will transfer 8,000 staff and 3.5 million customers. The move will make Ovo the UK’s second largest energy firm behind British Gas.
The Perth-based group said it will do “all it can” to ensure a smooth transition for customers and employees moving to the new owner.
SSE Energy Services is the third-largest supplier in the GB energy market, supplying energy and related services to around 3.5 million household customers. As well as electricity and gas, the business provides telephone, broadband, metering, boiler installation and maintenance services.
The deal, made up of £400 million cash and £100 million in loan notes, is expected to complete in late 2019 or early 2020 and is subject to regulatory approvals. SSE will use the cash proceeds to reduce its net debt.
SSE was forced to scrap a merger with Big Six rival npower last December after the Government’s energy price cap sent shockwaves through the industry.
Alistair Phillips-Davies, SSE’s chief executive, 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. 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.”
Under the old Scottish Hydro Electric brand, SSE was the sole supplier of electricity to households across Tayside, the north-east of Scotland and Highlands until the opening up of domestic energy in 1996. SSE was formed from the merger of Scottish Hydro, Southern Electric and Swalec but continued to use the Hydro brand in Scotland for several years.
Bristol-based OVO is the UK’s largest independent energy supplier, serving 1.5 million customers. Its chief executive Stephen Fitzpatrick said the transaction “marks a significant moment for the energy industry”.
He added: “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. 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.”
The groups said there will be no immediate impact on customers after completion. The SSE brand will be operated by OVO under licence for a period.
