SSE and Innogy SE – Npower’s parent company – have today announced that the Big Six firms plan to merge their household businesses to create a new energy company.
This firm will not be controlled by either Innogy or SSE; Innogy will hold a minority stake of 34.4% in the combined company, while SSE plans to demerge its stake of 65.6% to its shareholders upon completion of the transaction.
The move will result in the so-called Big Six UK energy suppliers decreasing to the Big Five.
However, the transaction is still subject to the approval of Innogy’s supervisory board and of SSE’s shareholders, as well as approval by competition and regulatory authorities.
Completion of the transaction and the listing of the new energy company is expected to take place in the last quarter of 2018 or the first quarter of 2019, subject to approval. Until the merger becomes effective, both Npower and SSE will remain independent of each other.
Npower says there’s no change at present for existing customers and that it’s business as usual.
We’ve contacted SSE to ask what the deal means for its existing customers but we’ve yet to have a response. We will update this news story as soon as we do.
Peter Terium, chief executive of Innogy SE, says: “We have made great progress in restructuring Npower over the past two years and have improved our performance considerably.
“However, when we look at the competitive landscape and the uncertain political environment for energy retailers in Great Britain, Npower would be better placed to offer value to our customers and our shareholders as part of a new company with the ability to succeed in the face of the challenges that lie ahead.
“We are convinced that bringing Npower together with SSE’s household energy and energy services business will combine unique skill sets into a major, independent British retail energy company that would achieve greater operating efficiencies and deliver better service to our customers.”
‘Mergers of big players are rarely a good thing’
However, consumer group Which? is concerned that the merger will result in less competition in the energy market. Alex Neill, Which? managing director of home products and services, comments: "Mergers of such big players in essential markets, such as energy, are rarely a good thing for consumers, especially given the low levels of competition.
“As both businesses struggle on customer service, coming in the bottom half of our satisfaction survey, the competition authorities must take a hard look before allowing any venture to go ahead.
"Any consumers unhappy with their current energy provider should consider switching to a better deal."
Claire Osborne, energy expert at price comparison website uSwitch, adds: “If this deal goes ahead it could create one of the biggest energy suppliers in the country.
“But the question for consumers will be whether this new supplier leads to improvements in pricing or customer service. The regulatory authorities will need to be satisfied that this deal works in the best interest of consumers.”