Today (15 January), OVO Energy has completed its acquisition of supplier SSE’s GB household energy business.
The acquisition was first announced in September, and approved by the Competition and Markets Authority (CMA) in December.
The move will see OVO become the second largest supplier in the UK, with five million customers. It said that gaining SSE’s smart technology and exceptional talent in the form of its 8000 staff will help to accelerate OVO’s strategy to bring clean affordable energy to more households.
OVO bought SSE Energy Services for £500 million, which comprises of £400 million in cash and £100 million loan notes. These loan notes will be issued by a member of the OVO group, have an annual interest rate of 13.25% payable in kind and will be due in 2029 if they have not been repaid earlier.
The transaction will be subject to a deduction of £59m reflecting debt-like items, SSE announced, including SSE Energy Services’ accruals in respect of the Capacity Market Mechanism.
Stephen Fitzpatrick, CEO and founder of OVO said that this marks the end of one chapter for OVO but “more importantly, the beginning of the next one together with SSE Energy Services”.
“We have an integration plan that leaders from both companies have collaborated on since September. There is a lot of work to do to bring the two businesses together, but we have a really strong combination of great talent, technology and customer centricity that will enable us to succeed.
“SSE’s history of excellence at scale combined with OVO’s innovative technology and our Plan Zero commitments mean that together, as one team, we can bring millions more people with us on our journey towards zero carbon living.”
OVO was formed in 2009, and has since grown to become the largest independent supplier in the UK. It has committed to eliminating its customer’s household emissions and fit five million homes with flexible, clean energy technologies as part of a wide-ranging carbon-cutting initiative dubbed ‘Plan Zero’ it announced in 2019.
It has continued to grow over the last year, investing in clean energy marketplace Renewable Exchange and energy technology start-up firm Electron. It also announced a partnership with automotive giant Mitsubishi motors last December.
OVO also claims that it installed the world’s first domestic vehicle-to-grid charger in a customer’s home.
The CMA launched an investigation into the company’s acquisition of SSE Energy Services in October, to ensure that it would not lessen competition in the UK.
Alistair Phillips-Davies, CEO of SSE said: “We are very pleased to have completed this transaction, which we firmly believe is the best outcome for the business, its customers and its employees.
“The sale is in line with our clear strategy, centred on developing, operating and owning renewable energy and electricity network assets, along with growing businesses complementary to this core.
“SSE enters the new decade as a more focused group, even better positioned to lead the low carbon transformation required to achieve the UK’s vital net zero commitment in the years to come.”
In a blog post today, Philips-Davies said that SSE’s strategic focus had shifted to developing, building and maintaining low carbon assets.
He continued: “For SSE, our core purpose in the years ahead is clear. We are providing the energy needed today while building a better world of energy for tomorrow.”
The company has struggled in recent years, with a loss of profit of £284.6m in 2018. It has started to bounce back, with its interim results statement in November reporting a 14% increase to adjusted operating profit.