Ovo Buys SSE To Become Britain’s 2nd Largest Energy Supplier – BinaryOptions

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Ovo Buys SSE To Become Britain’s 2nd Largest Energy Supplier

Published on October 14, 2020

Ovo Energy, the biggest UK independent energy supplier, has purchased Southern and Scottish Electric (SSE) and merged to create what will become the second-largest energy supplier in the UK.

SSE, which is listed on the London Stock Exchange as part of the FTSE 100, will sell its retail business for £500m to the Bristol-based Ovo, who until now has been kept out of the famous Big Six energy retailers.

Ovo, which currently has 1.5m customers and 2000 employees, will take on SSE’s 3.5m customers and 8000 staff to make them the second-biggest energy company in the UK, after British Gas.

Phased Transfer Through 2020 And 2020

SSE has announced that the changeover will likely take place in late 2020 to early 2020 and will be a phased transfer so as to limit the disturbance to both staff and customers.

It also confirmed that there should be no immediate issues for their combined customer base after the deal was secured and that the use of the SSE brand would be done through a phased introduction over the beginning of 2020.

Many see this new merger as a sign of the increasing dominance of independent energy suppliers throughout the United Kingdom, who have continued to challenge the Big Six as customers have transferred to their services over the traditional suppliers.

SSE Weakness

The deal comes in the wake of troubles for SSE, who announced plans earlier this year to offload its energy services division after it was found that around half a million households had switched to another energy supplier from them.

Representatives from the firm announced that the company would attempt to sell or float its energy services departments at the back end of 2020.

It’s also not the first time SSE has attempted to merge, in 2020, a proposed deal with fellow Big Six supplier Npower was called off.

Ovo Energy started in 2009 and has been growing quickly over the last few years. In 2020, they acquired Spark Energy, one of their biggest competitors, and were valued at £1bn by the Mitsubishi Corporation, who owns a 20% share in the company.

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Ovo Energy buys SSE: what it means for customers

The deal will make Ovo Britain’s second biggest energy supplier

Big Six energy provider SSE is selling its retail business to independent provider Ovo in a deal worth £500 million.

The move will make Ovo the second biggest energy supplier in the country after British Gas, effectively a new player in the so-called “Big Six” energy suppliers.

SSE is the third largest energy supplier in the UK currently, supplying around 3.5 million households.

Ovo was set up 10 years ago and has expanded to become Britain’s largest independent energy supplier with 1.5 million customers.

SSE and Npower’s parent company Innogy attempted to merge their retail divisions last year, but the deal collapsed, with SSE blaming “challenging market conditions”.

Growing competition in the energy market as well as a price cap on tariffs have hit suppliers hard, forcing them to review their businesses.

SSE chief executive Alistair Phillips-Davies says: “We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders – and this is an excellent opportunity to make that happen.

“Following the transaction, SSE will be able to give an even greater focus to delivering the low carbon infrastructure needed to help the UK reach net zero emissions.”

Stephen Fitzpatrick, chief executive of OVO, says: “SSE and OVO are a great fit. They share our values on sustainability and serving customers. They’ve built an excellent team that I’m really looking forward to working with.”

The deal is expected to be completed in late 2020 or early 2020.

What should SSE customers do?

The transaction is still subject to regulatory approval and is not expected to be completed until early 2020.

Until this happens, SSE customers will remain on their current deals.

If a customer’s deal is up before this happens they will have the option of renewing with SSE or switching to a new deal.

Once the deal is approved, OVO will get in touch with customers to explain the next steps.

Is it a good deal for customers?

Rik Smith, uSwitch energy expert, says SSE customers should have “nothing to fear” from the takeover.

“The good news for consumers is that the two existing companies have a good track record of treating customers well.

“Where they go with their prices remains to be seen, but there are also questions about the brand name that will on people’s bills in future. SSE customers are very loyal to its Swalec, SSE, and Scottish Hydro brands in various parts of the country.

“Ovo is also known to be at the forefront of new technology such as electric vehicle charging and smart meters, and buying the current second largest supplier in the country means there is a huge opportunity for them to expand further in this area.

Stephen Murray, energy expert at MoneySuperMarket, says: “The likes of Ovo, Shell, Bulb and Octopus mean there’s a base of emerging suppliers who are continuing to challenge the Big Six in the domestic energy market and can fill the void left by SSE deciding to focus on other parts of its business.

“Today’s announcement will enhance the ever-growing competition for customers, which means you’ll have more choice, more competitive tariffs and a switching market where hundreds of pounds worth of savings are readily available for who are open to moving supplier.”

SSE sale of retail business to Ovo creates new UK energy giant

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Ovo is set to become the UK’s second largest energy supplier after it agreed to buy SSE’s retail business for £500m.

Ovo – which was created 10 years ago – is already the UK’s largest independent energy supplier, with 1.5 million customers and about 2,000 employees.

But it will now take on SSE’s 3.5 million customers and 8,000 staff, making it second only to British Gas.

SSE said it would “do all it can to ensure a smooth transition for customers and employees”.

The deal is expected to be completed in late 2020 or early 2020.

SSE – one of the Big Six energy suppliers – said there would be no immediate impact on customers after completion.

It added that the SSE brand would be operated by Ovo under licence for a period, “allowing time for a phased and carefully managed migration and continued high standards of customer service”.

Stephen Murray, energy expert at MoneySuperMarket, said Ovo’s deal to buy SSE’s business “will enhance the ever-growing competition for customers”.

“The likes of Ovo, Shell, Bulb and Octopus mean there’s a base of emerging suppliers who are continuing to challenge the Big Six in the domestic energy market.”

SSE had announced in May that it planned to offload its energy services division after more than 500,000 households switched to a new supplier in the year to April. The company said it would sell or float its energy services arm by the second half of 2020.

In November last year, a proposed merger of SSE’s household supply arm with rival Npower was called off, with SSE blaming “very challenging market conditions”.

The introduction of the energy price cap by the government had led SSE and Npower to renegotiate their planned tie-up, but they failed to agree a deal.

Announcing the sale of the business to Ovo, SSE chief executive Alistair Phillips-Davies said: “We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders – and this is an excellent opportunity to make that happen.

“I’m confident that this is the best outcome for the SSE Energy Services business.”

The founder and chief executive of Ovo, Stephen Fitzpatrick, described the deal as a “significant moment for the energy industry”.

“SSE and Ovo are a great fit. They share our values on sustainability and serving customers. They’ve built an excellent team that I’m really looking forward to working with.”

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