The UK’s competition watchdog, the Competition and Markets Authority, has cleared Ovo Energy’s takeover of SSE’s energy supply sector. The takeover will cost £500 million but will not affect competition in the energy market.
Ovo will now become the UK’s second largest energy supplier behind British Gas. The deal will also provide a massive financial boost to Ovo’s multi-millionaire founder, Stephen Fitzpatrick. It has been estimated that his personal wealth will now top £600 million.
Ovo will fund the deal through a £100 million loan agreement with SSE. They will then add the other £400 million via a mix of cash with new debt arrangements. Some of this funding will come from an investment of £200 million by the Mitsubishi conglomerate made earlier this year. That investment was made in exchange for a 20% stake in the company. The firm’s financial advisory partner, Barclays Capital, will also help fund the deal.
The takeover will increase Ovo’s customer base from 1.5 million to 5 million.
Tory Donor Fitzpatrick Avoids Labour Showdown
Mr Fitzpatrick, a well known donor to the Conservative Party, will be especially pleased at the recent election result. The former banker and owner of the now-defunct Formula 1 team Manor still holds a 67% stake in Ovo Energy. He founded the firm ten years ago which has since become valued at £1 billion prior to the SSE takeover.
A Labour victory at the recent general election could have caused major problems for the deal. Part of Labour’s manifesto was a plan to renationalise the Big Six energy companies. However, the Tory party’s emphatic win has cleared the way for the takeover to go ahead.
Mr Fitzpatrick said of the takeover deal: “There is a lot of work to be done, but we are excited about the challenge ahead and the opportunity to help even more customers on the journey to zero carbon.”
He added that he was looking forward to bringing SSE into the Ovo family once the takeover is completed next month.
New SSE Takeover Replaces Former Npower Plans
The original plan was for SSE to merge with Npower. However, the introduction of the Government’s price cap and increasing competition put paid to that plan.
The Chief Executive of SSE, Alistair Phillips-Davies, denied the merger with Npower had been “botched”, adding: “We closely monitored the impact of all developments and continually reviewed whether this remained the right deal to do for our customers, our employees and our shareholders. Ultimately, we have now concluded that it is not.”
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