US POWER firm PPL is buying German utility E.ON’s UK power networks for £3.5bn in cash to create one of the largest electricity distributors in the country, the firm announced yesterday.
PPL, which beat a rival bid from Hong Kong billionaire Li Ka-Shing according to people familiar with the matter, also plans to assume £500m of debt.
The deal, expected to close in early April, is set to create the largest network of electricity delivery companies in Britain in terms of regulated asset value, at a combined $7.8bn (£4.78bn), PPL said in a statement.
The E.ON business, called Central Networks, is the UK’s second-largest electricity distributor and delivers power to over 5m customers. It would add to PPL’s existing pool of 2.6m customers in south west England and Wales.
E.ON chief executive Johannes Teyssen said: “[A]fter nine years of full ownership, the business offers E.ON limited value enhancement opportunities and, due to the strict regulation, there is no possibility to leverage synergies with other E.ON businesses in the UK.”
The sale is an important milestone for E.ON, which is selling assets worth more than €15bn (£12.7bn) by the end of 2013 in order to pay down its debt pile.