A proposed merger between two of the UK’s largest energy companies has been scrapped after SSE and Npower failed to agree on terms to ensure financial support for the new firm.
The merger would have seen the UK’s “Big Six” energy providers reduced to five, although it came under a cloud of doubt last month when the two companies said they would begin negotiating “commercial terms” to provide the new firm with trading collateral, which would allow it to be listed on the London Stock Exchange.
On Monday, SSE pulled the plug on the deal stating it would undertake a demerger of its retail business as a standalone company that it would sell or list.
Alistair Phillips-Davies, Chief Executive of SSE, said: “This was a complex transaction with many moving parts. We closely monitored the impact of all developments and continually reviewed whether this remained the right deal to do for our customers, our employees and our shareholders.”
He added: “Ultimately, we have now concluded that it is not. This was not an easy decision to make, but we believe it is the right one.”
The Big Six firm pointed to changing market conditions, the final price cap level to be introduced next year and the performance of the two companies as reasons for its decision.
SSE said its retail business is expected to be profitable over the next two years with positive cashflow and would therefore be “exploring all the available options” for its future outside of the organisation.