Spanish-owned Scottish Power sparks merger talks with Ovo Energy

Scottish Power, the Spanish-owned vigor supplier, and larger rival Ovo Energy person begun holding exploratory talks astir a merger that would make a institution serving much than 6 cardinal British households.

Sky News has learnt that executives from Iberdrola, which owns Scottish Power, and Ovo person been engaged successful preliminary discussions successful caller weeks astir the anticipation of a deal.

The talks are astatine an aboriginal signifier and immoderate ceremonial transaction would beryllium months away, if it materialised astatine all.

If the 2 companies bash hold a merger of their residential state and energy operations, it would make the third-largest supplier down Centrica-owned British Gas and Octopus Energy.

As the larger company, with 4 cardinal customers, Ovo would astir apt beryllium the acquiring entity, but with Iberdrola perchance contributing currency and remaining arsenic a shareholder successful the enlarged group, according to 1 banking source.

Scottish Power serves astir 2.4 cardinal households.

The discussions betwixt the 2 companies are moving successful parallel to a abstracted process done which Ovo is exploring the imaginable to rise astir £300m from the merchantability of caller shares successful the company, according to manufacture sources.

In caller weeks, a fig of fiscal investors person been contacted by Rothschild, the concern slope advising Ovo, astir the opportunity.

Exactly a twelvemonth ago, Sky News revealed that Ovo had hired Rothschild to research options including bringing successful a caller capitalist oregon a sale, 15 years aft it launched successful a bid to situation the industry's oligopoly.

Founded by Stephen Fitzpatrick, the entrepreneur who present owns London's Kensington Roof Gardens, Ovo's shareholders see the backstage equity steadfast Mayfair Equity Partners, Morgan Stanley Investment Management and Mitsubishi Corporation, the Japanese conglomerate.

Under Mr Fitzpatrick, who launched Ovo successful 2009, the institution positioned itself arsenic a challenger marque offering superior work to the industry's established players.

Ovo's transformational infinitesimal came successful 2020, erstwhile it bought the retail proviso limb of SSE, transforming it overnight into 1 of Britain's starring vigor companies.

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Its maturation has not been without difficulties, however, peculiarly successful narration to its challenged narration with Ofgem and a torrent of lawsuit complaints astir overcharging.

Justin King, the erstwhile J Sainsbury main who present chairs Ovo, has made repairing its regulatory relationships a precedence for the company.

He besides oversaw the recruitment of David Buttress, who was concisely Boris Johnson's cost-of-living tsar aft leaving the apical occupation astatine Just Eat, arsenic its main executive.

Key to Ovo's longer-term valuation volition beryllium the show of its exertion platform, Kaluza, which was acceptable up to licence bundle to different vigor suppliers and provides customers with astute electrical conveyance charging and vigor pumps.

Ovo announced past twelvemonth that AGL Energy, 1 of Australia's biggest vigor suppliers, had bought a 20% involvement successful Kaluza astatine a $500m (£395m) valuation.

The British vigor institution has besides entered the electrical conveyance car charging assemblage nether the marque Charge Anywhere, adding tens of thousands of nationalist charging points crossed the UK.

Iberdrola bought Scottish Power successful 2007 successful a woody valuing the institution astatine much than £11bn.

Next week, the UK's vigor terms headdress volition autumn by 7% to £1,720 a year, pursuing an announcement by Ofgem, the manufacture regulator.

Ovo and Scottish Power some declined to comment.

This breaking quality communicative is being updated and much details volition beryllium published shortly.

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