Octopus Energy has struck a deal to become one of the UK’s fastest growing energy suppliers after agreeing to buy a smaller rival.
The energy challenger brand told its staff on Wednesday that it has agreed to buy Co-op Energy, which supplies gas and electricity to about 300,000 homes.
Octopus, which supplies 850,000 customers, is expected to confirm early on Thursday that the deal will nudge its business past 1 million customers after only four years in the market.
The deal, thought to be worth more than £30m, propels Octopus to within a whisker of rival supplier Bulb Energy, which supplies 1.4 million customers and is the UK’s fastest growing new supplier.
It follows a flurry of deals within the energy market which is beginning to consolidate after a flood of new suppliers joined the market in recent years, many of which have proved financially unstable.
Co-Op Energy snapped up 160,000 customers from GB Energy Supply after it collapsed in 2016, and then gained another 130,000 customers after its takeover of Flow Energy last year.
The company, part of the Midcounties Co-op, has since run into financial trouble. It revealed deepening losses earlier this year in the Co-op’s financial report, which hinted that the supplier might be sold to protect the wider business.
Octopus Energy, which is owned by Octopus Group, is also loss-making but has the full support of its investment fund owner which has ambitions to grow the business to compete with the big six.
Octopus Group was an early backer of the property site Zoopla and backs Big Gym, Secret Escapes and Eve mattresses through its investment arm Octopus Ventures.
Its fast-growing energy supplier bought smaller rival Affect Energy last September and took on the customers of failed energy start-up Iresa in December last year.
It also won a lucrative contract to supply energy to M&S Energy customers that was previously held by SSE for nine years.