E.ON said the deal to buy struggling UK rival OVO Energy would bring bills down for customers. Photograph: Friedemann Vogel/EPAE.ON said the deal to buy struggling UK rival OVO Energy would bring bills down for customers. Photograph: Friedemann Vogel/EPAE.ON agrees to buy Ovo in deal to create UK’s biggest energy supplierAcquisition would result in combined company serving about 9.6 million customers if given regulatory approval
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.
The combined company will serve about 9.6 million customers, overtaking the market leader, Octopus, which serves almost 8m households in the UK.
E.ON said the deal 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”. Clearance of the acquisition is expected in the second half of the year.
Ovo said it had also agreed to sell its home services business, which provides boiler insurance and boiler servicing, to Hometree.
The German supplier has about 5.6 million customers in the UK, while Ovo, which was founded in 2009 by the green energy entrepreneur Stephen Fitzpatrick, has 4 million.
Fitzpatrick said: “Energy retail is now more regulated, more capital intensive and increasingly dependent on long-term investment and scale. In that context, bringing Ovo together with E.ON is the right next step for customers, for colleagues and for the long-term commitment that decarbonisation requires.”
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.”
In 2019, Ovo became the UK’s then second-biggest energy supplier after it agreed to buy SSE’s home energy business in a £500m deal that challenged the dominance of the big six energy suppliers.
OVO Energy, which was founded by Stephen Fitzpatrick, bought SSE’s home energy business in 2019. Photograph: Jeff Overs/BBC/ReutersHowever, it has been struggling and in September cast doubt on its future. It said in its financial accounts that there was uncertainty around the plan it had agreed with the regulator to improve its capital position, after failing financial stress tests.
E.ON said for too long, the energy system had been shaped upstream, around large-scale generation, but it wanted to be a company that orchestrated consumer flexibility, digitisation, solar, batteries and electric vehicles.
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.
Norbury added: “The future of energy is flexible, digital and customer-led. Our job is to make new energy work for everyone.”
He said E.ON chose Ovo because it was a “modern digitally native business with great people”. With about 7m smart meters installed, E.ON and Ovo together connect more than 60% of their customers in the UK in a fully digital manner.
The company intends to 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.
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