SSE and Npower have confirmed they will merge their domestic operations, creating the second largest energy supplier in the UK.
The merger between SSE and Npower will create a company with a customer base of around 11.5m, becoming the UK’s second largest energy supplier, behind Centrica’s British Gas.
SSE and Npower, owned by German firm, Innogy will combine their British retail energy businesses, resulting in a ‘Big 5’ of energy suppliers. The new company will be owned by shareholders of SSE, with Innogy owning a minority.
Before any deal can be finalised it must be approved by shareholders and regulators but SSE expect the merger agreement to be finalised in the last quarter of 2018, or the first quarter of 2019.
Alistair Phillips-Davies, chief executive of SSE, said: "We are very proud of what we've delivered as a group over many years; but we have been and remain committed to taking the right decisions in each of our businesses to secure the right outcomes for energy customers and other stakeholders.”
He added: "The scale of change in the energy market means we believe a separation of our household energy and services business and the proposed merger with Npower will enable both entities to focus more acutely on pursuing their own dedicated strategies, and will ultimately better serve customers, employees and other stakeholders.”
SSE claim the merger will result in “significant synergies”, as the implementation of a combined IT platform will result in capital expenditure savings; allowing the new firm to compete more effectively in markets and reduce costs for its customers.
On Wednesday, SSE announced an 8% drop in adjusted operating profits for the 6 months to the end of September, decreasing to £586.2m. However, SSE claim that the results were roughly in-line with its expected earnings for this financial year.
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