E.ON agrees to buy Ovo in deal to create UK’s biggest energy supplier
The German energy group E.ON has agreed to buy struggling UK rival Ovo in a deal that would create Britain’s biggest gas and electricity supplier by number of households served.The combined company will supply about 9.6 million customers, overtaking the market leader, Octopus, which serves almost 8m homes in the UK.The value of the deal was not disclosed, but reports have estimated it at £600m.
E.ON said the takeover represented a significant investment in the UK market and would bring bills down for customers.It said there would be no changes at its domestic energy supplying arm E.ON Next, nor at Ovo, while it awaited regulatory approval for the deal, stressing “existing tariffs will be honoured in full and service will continue unchanged”.The acquisition is expected to be cleared in the second half of the year.
Measured by its number of electricity and gas accounts, the combined E,ON-Ovo business would rank just behind Octopus, which would remain the supplier with the largest market share of 26%, according to data from Cornwall Insight,E,ON did not comment on what the deal could mean for jobs,It is understood that once it has been completed, the German supplier will establish a transformation office to develop the integration plans.
It believes that a larger customer base enables faster investment in technology, products and services, which will benefit customers and support the energy transition.Ovo, the UK’s fourth-largest gas and electricity supplier, said it had also agreed to sell its home services business, which provides boiler insurance and boiler servicing, to the energy services company Hometree.E.ON has about 5.6 million customers in the UK, and Ovo 4 million.
Ovo was founded in 2009 by the green energy entrepreneur Stephen Fitzpatrick as a challenger to the big six suppliers.It became the UK’s second-biggest energy supplier of the time in 2019 after it agreed to buy SSE’s home energy business in a £500m deal that challenged the dominance of the big six companies, such as Centrica’s British Gas.It has been struggling financially more recently, however, and is barely profitable.It cast doubt on its future in September, saying in its financial accounts that there was material uncertainty about the plan it had agreed with the regulator to improve its capital position after failing the regulator Ofgem’s financial stress tests.It has since cut hundreds of jobs to reduce costs.
Fitzpatrick reportedly failed in his plans to convince other shareholders to inject £200m into Ovo, dashing his hopes of retaking control of the business.Marc Spieker, the chief operating officer commercial at E.ON, said: “The United Kingdom is an important growth market for E.ON, particularly for flexibility and customer‑focused energy solutions.The planned acquisition of Ovo strengthens our retail business.
”The company will continue Ovo’s energy intelligence platform licence agreement with the software company Kaluza, which simplifies energy billing and reduces costs, and will look into potentially using it across the wider E.ON group outside the UK.Ovo sits within a sprawling empire controlled by Fitzpatrick, including the flying taxi firm Vertical Aerospace, Kaluza and London’s Kensington Roof Gardens.Chris Norbury, the chief executive of E.ON’s UK business, said: “For decades the UK energy system focused too much on those upstream.
Now is our opportunity to change that.Solar, batteries, EVs and a retailer built to orchestrate.That is what this deal is about: customers in control and new energy that works for everyone.”E.ON Next offers time-of-use tariffs that reward customers for shifting energy use to cheaper, off-peak periods.
The energy supply lead at Cornwall Insight, Tom Goswell, said: “The proposed deal reflects a market that has changed significantly over the past five years.Higher costs and tighter regulation have naturally favoured suppliers with the scale to absorb them, and E.ON acquiring Ovo is a logical step in that direction.“Larger suppliers can bring stability, resilience, and the ability to invest in the products and services that will matter as households move towards heat pumps, EVs, and flexible tariffs.However, as the market becomes more concentrated, it will be important to consider what this means for consumer choice.
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