Published: Wed, November 08, 2017
Economy | By Melissa Porter

SSE and innogy confirm talks to merge supply and services divisions

SSE and innogy confirm talks to merge supply and services divisions

Scottish-based SSE, listed in the United Kingdom, is Britain's second biggest energy supplier, while the npower brand is owned by German company innogy.

On Tuesday, SSE confirmed that it has been in talks with innogy over creating a new independent energy supply company, which would combine both companies' household energy supply and services business in the UK.

The announcement comes as Britain's Big Six brace for a raft of regulatory changes after the government announced last month that a price cap will be imposed on poor-value energy tariffs.

SSE supplies gas and electricity to around eight million homes across the UK.

While talks are "advanced", no final decisions have been taken "and no binding agreements regarding the terms of any combination have been entered into", said the firm.

The combined business would be listed and SSE would demerge its shares to its shareholders.

Shares in SSE rose 3.28% to 1,419.50p on the news in afternoon trading. "But the real question is whether regulators would let this one pass, and it's hard to see it overcoming competition concerns", said analysts at ETX Capital.

Any deal would likely have significant repercussions on the UK's already competitive energy supply market.

Two of the UK's biggest energy companies, SSE and npower, have announced plans to merge their residential supply business. The companies have to think about what to do in Britain and whether going it alone still makes sense.

The big six are also facing an impact to profits from price caps proposed by the government.

Utilities have criticised the move, with some saying it would hit competition and others saying SVTs should be scrapped altogether.

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