Ovo today completed the acquisition of SSE’s retail arm on a landmark day for the UK energy sector.
The £500m deal will see Ovo take on roughly 3.5m households from the energy giant, meaning it will become the second largest supplier in the country with around 5m customers.
The sale means that SSE will drop out of the UK’s so-called Big Six energy suppliers.
Stephen Fitzpatrick, chief executive and founder of Ovo, said:
“Today is an exciting day. It marks the end of one chapter for Ovo but, more importantly, the beginning of the next one together with the SSE Energy Services business. We started [the firm] with a bold ambition to do better for customers and have stayed true to that vision ever since.
“SSE’s history of excellence at scale combined with [our] innovative technology and our Plan Zero commitments mean that together, as one team, we can bring millions more people with us on our journey towards zero carbon living.”
All of SSE Energy Services 8,000 employees will transfer to Ovo. The division’s chair, Katie Bickerstaffe, who was appointed in 2018, will leave the firm, the Telegraph reported over the weekend.
Bickerstaffe was due to run the new business that would have been created from the proposed merger with Npower, but the deal fell through.
Alastair Phillips-Davies, SSE’s chief executive, said: “We are very pleased to be completing this transaction, which we firmly believe is the best outcome for the business, its customers and its employees.
“SSE enters the new decade as a more focused group, even better positioned to lead the low carbon transformation required to achieve the UK’s vital net zero commitment in the years to come”, he added.
In December the Competition and Markets Authority (CMA) green-lighted the deal, which was agreed in September. Ovo will pay £400m in cash and £100m in loan notes.
SSE said that the net cash proceeds from the sale would be used to reduce its debt.
Peter Earl, head of energy at comparethemarket.com, said: “Today marks a significant shakeup in the energy market; as recently as 2004 the Big Six had almost 100 per cent of the energy market, but by mid-2019 this had dropped to less than 75 per cent.”
He added that the rise of challenger brands such has made the biggest firms reconsider their operations, with larger players now resorting to “temptingly priced tariffs [to] lure former customers back.”
Customers will not feel an immediate day-to-day, with Ovo operating the SSE brand until a phased migration can take place.
SSE will continue to supply energy to businesses in the UK, as well as households in Ireland.