Sign up Australia
Proactive Investors - Run By Investors For Investors

SSE merger with Npower hangs in the balance as parties renegotiate terms

An update on their progress will be provided by mid-December. SSE does not intend to provide further comment on the discussions until that update
Electricity pylons
All work to seek to achieve the formation and listing of the new company will continue.

Completion of the proposed merger of the retail units of SSE plc (LON:SSE) and Innogy is now likely to be delayed as the terms are renegotiated.

SSE announced after the market had closed on Thursday that SSE and Innogy SE, the owner of npower, are working together regarding potential changes to the commercial terms of the proposed combination of SSE Energy Services and npower Limited.

READ: SSE PLC's planned merger of retail unit with Npower cleared by UK regulator

SSE said that it is likely that the proposed combination will be delayed beyond the first quarter of next year.

The merger of SSE and npower was cleared by the Competition and Markets Authority last month but since then SSE said it had “become apparent that the impact of some recent market developments mean that the commercial terms associated with the proposed combination will need to be reconsidered”.

The developments alluded to include the potential impact of the recently introduced cap on the default tariff of energy providers.

Next year will see the introduction of the energy bill price cap, which has been set at £1,137 a year for "typical usage".

SSE said the cap would have an impact on the merged company’s requirement to post collateral against its credit exposure and its ability to retain an appropriate credit rating.

Any changes to the combination terms would be designed to mitigate the impact of these developments.

“We continue to believe that creating a new, independent energy supplier has the potential to deliver real benefits for customers and the market as a whole, and that remains our objective,” said Alistair Phillips-Davies, the chief executive officer of SSE.

"In assessing potential changes to the commercial terms of the proposed SSE Energy Services/npower combination, the interests of customers, employees and shareholders will be paramount,” he added.

Shares in SSE were down 3.6% at 1,139.5p in early deals.

View full SSE profile View Profile

SSE plc Timeline

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use