SSE and Innogy in 'well-advanced' merger discussions
British energy supplier SSE is in talks with the parent company of rival Npower, German firm innogy, about potentially forming the UK's largest power company.
Electricity
9,976.62
17:09 25/04/24
FTSE 100
8,078.86
17:14 25/04/24
FTSE 350
4,434.34
17:09 25/04/24
FTSE All-Share
4,387.94
16:49 25/04/24
SSE
1,650.50p
16:44 25/04/24
Discussions between the two were "continuing" over a potential combination of both groups' gas and electricity supply businesses.
SSE said talks were "well-advanced" before adding that no final decisions had been taken and that no binding agreement had been entered into.
The group, formerly known as Scottish and Southern Energy, said that any proposal to form a new independent company would remain subject to customary regulatory approvals, as well as the consent of SSE's shareholders before the two would see their shares demerged.
As of 1630 GMT, SSE's shares had gained 3.35% on the day to sit at 1,420p.
Analyst Neil Wilson at ETX Capital said, "At first glance it's hard to see how the regulator would let this one through. Cutting the big six down to a big five would hardly help competition, which is exactly what the government wants. A merger would create the UK’s largest household energy supplier with a 24% market share, ahead of British Gas’s 22%."
"The problem and arguably the rationale is that the big six are losing customers at a record pace to smaller suppliers. Smaller suppliers now account for more than 8% of market share, up from 1% just three years ago, according to Ofgem data. The big six also face a hit from price caps – consolidation has its appeal in this kind of environment – just look at the gambling industry’s raft of deals," he added.