British energy utility SSE and Innogy's subsidiary npower have agreed to merge their power and gas retail operations in the United Kingdom to create a new energy company with pro-forma sales of £11bn (€12.5bn). The new company is expected to be roughly the size of the UK market leader British Gas (Centrica's subsidiary) and will serve around 11.5 million customers. The completion of the transaction and the listing of the new retail energy entity are expected to occur by the end of 2018 or at the beginning of 2019 and once all necessary approvals are achieved, namely from Innogy's supervisory board, SSE shareholders along with the Competition and Markets Authority (CMA).
Innogy will have a 34.4% interest while SSE will own a majority stake of 65.6%. Nevertheless, the new combined retail entity will neither be controlled by Innogy, nor by SSE, which plans to demerge its stake to its shareholders upon completion of the transaction. The new company shall be listed on the premium segment of the London Stock Exchange. SSE’s business retail and its Ireland businesses will not be included in the combined retail company.
This deal comes less than a month after the British government published draft legislation to lower the cost of energy bills. If approved, it would cut the number of big energy retailers in Britain from six to five.
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