SSE and Npower merger plan scrapped, blaming government’s energy price cap
18th December 2018 | Residential Energy
Energy giants and Npower have scrapped their merger plan, blaming “challenging market conditions” and the government’s price cap. The companies said the deal has been affected by multiple factors, including the performance of their businesses, clarity on the final level of the government’s default tariff cap and changing energy market conditions.
A spokesperson for SSE said, “These implications meant the new company would have faced very challenging market conditions, particularly during the period when it would have incurred the bulk of the integration costs.”
The two firms had been hoping to seal the merger of their retail operations in the first quarter of 2019 after the tie-up was recently given the green light by the competition watchdog. But only last month SSE admitted there was “some uncertainty” over whether the merger with Npower would go ahead after the pair delayed the amalgamation due to the incoming cap on default tariff prices.
SSE NPower Merger Plan
SSE will now consider a standalone demerger and listing, a sale or an alternative transaction for its household energy division. Chief Executive Alistair Phillips-Davies said, “This was a complex transaction with many moving parts. We closely monitored the impact of all developments and continually reviewed whether this remained the right deal for our customers, our employees and our shareholders. Ultimately, we have now concluded it is not. This was not an easy decision to make, but we believe it is the right one.
“We are now exploring all the available options with a view to delivering this future in the best possible way. In this, the interests of our customers, employees and shareholders remain paramount. In the meantime, we remain strongly committed to high standards of service for customers, and delivery of our five year dividend plan for shareholders.”
Last month SSE revealed widened losses for its household gas and electricity supplier and the loss of another 460,000 customer accounts as fierce competition took its toll.
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