SSE sharpens focus after watchdog clears Ovo Energy deal
The Competition and Markets Authority (CMA) said it will not launch a second-phase investigation into the landmark £500 million acquisition.
Britain’s traditional Big Six energy providers have been facing increased pressure from challenger suppliers such as Ovo in recent years. After encouragement from the regulator dozens of new energy companies set up, often offering more attractive deals than the slow-moving incumbents.
The cleared deal will still see SSE, formerly Scottish & Southern Energy, hold on to its electricity generation arm and its grid operations. It plans to treble its production of renewable energy by 2030, to some 12 gigawatts.
SSE chief executive Alistair Phillips-Davies said: “We are very pleased that the CMA has cleared the proposed sale of SSE Energy Services to Ovo Group.
“This underlines our long-held belief that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders. With the required regulatory approvals now in place, we can make the final preparations for completion, expected around mid-January 2020.”
He added: “Completion of the transaction will give SSE even sharper focus to delivering the low carbon infrastructure needed to help the UK reach net zero emissions.”
The power giant had been looking for something to do with its retail division for some time, but was dealt a blow around a year ago when it was forced to scrap a planned merger with Npower amid a challenging market.
Last month, SSE pledged to deliver on its dividend commitments despite trimming its interim shareholder payout after posting a double-digit hike in operating profit.
Reporting results for the six months to the end of September, the group also said it was “progressing well” with its switch to a low-carbon strategy.
Adjusted operating profit rose 14 per cent to £491.9m on the back of “generally wet and windy weather”.
It swung from a £284.6m pre-tax loss in the first six months of 2018 to a £128.9m profit on continuing operations this year, and invested more than £446m in its regulated electricity networks and renewable energy.
An interim dividend of 24p per share was 18 per cent down on the year before, reflecting a new dividend policy that was outlined in May of last year.
The board intends to recommend a full-year dividend of 80p, with annual RPI inflation growth in the three subsequent years.