The deal will make Ovo Britain’s second biggest energy supplier
Big Six energy provider SSE is selling its retail business to independent provider Ovo in a deal worth £500 million.
The move will make Ovo the second biggest energy supplier in the country after British Gas, effectively a new player in the so-called "Big Six" energy suppliers.
SSE is the third largest energy supplier in the UK currently, supplying around 3.5 million households.
Ovo was set up 10 years ago and has expanded to become Britain’s largest independent energy supplier with 1.5 million customers.
SSE and Npower’s parent company Innogy attempted to merge their retail divisions last year, but the deal collapsed, with SSE blaming “challenging market conditions”.
Growing competition in the energy market as well as a price cap on tariffs have hit suppliers hard, forcing them to review their businesses.
SSE chief executive Alistair Phillips-Davies says: "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."
Stephen Fitzpatrick, chief executive of OVO, says: “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 deal is expected to be completed in late 2019 or early 2020.
What should SSE customers do?
The transaction is still subject to regulatory approval and is not expected to be completed until early 2020.
Until this happens, SSE customers will remain on their current deals.
If a customer’s deal is up before this happens they will have the option of renewing with SSE or switching to a new deal.
Once the deal is approved, OVO will get in touch with customers to explain the next steps.
Is it a good deal for customers?
Rik Smith, uSwitch energy expert, says SSE customers should have “nothing to fear” from the takeover.
"The good news for consumers is that the two existing companies have a good track record of treating customers well.
"Where they go with their prices remains to be seen, but there are also questions about the brand name that will on people's bills in future. SSE customers are very loyal to its Swalec, SSE, and Scottish Hydro brands in various parts of the country.
"Ovo is also known to be at the forefront of new technology such as electric vehicle charging and smart meters, and buying the current second largest supplier in the country means there is a huge opportunity for them to expand further in this area.
Stephen Murray, energy expert at MoneySuperMarket, says: “The likes of Ovo, Shell, Bulb and Octopus mean there’s a base of emerging suppliers who are continuing to challenge the Big Six in the domestic energy market and can fill the void left by SSE deciding to focus on other parts of its business.
“Today’s announcement will enhance the ever-growing competition for customers, which means you’ll have more choice, more competitive tariffs and a switching market where hundreds of pounds worth of savings are readily available for who are open to moving supplier.”