Eon swallows Ovo in 600m deal that crowns Germany's biggest energy giant as Britain's largest supplier

"Eon has agreed to buy the retail arm of Ovo Energy in a transaction that will create Britain's largest household energy supplier and end the 17-year run of one of the country's best-known challenger brands as an independent operator."

"The deal, the value of which has not been disclosed but is understood by industry sources to be worth up to £600 million, will hand Eon roughly four million additional customers and lift its UK book to about 9.6 million households. That tally vaults the combined business past Octopus Energy, which had emerged as the market leader after absorbing the remnants of Bulb in 2022."

"For Ovo, the sale draws a line under a torrid 18 months in which the Bristol-based supplier warned in its most recent annual report of "material uncertainty" hanging over its future. The company had been struggling to meet the financial resilience benchmarks introduced by Ofgem after the wave of supplier failures that swept the sector in 2021 and 2022, and had drafted in advisers at Rothschild to shore up its balance sheet."

"Stephen Fitzpatrick, the entrepreneur who founded Ovo from a flat in Notting Hill in 2009 and who built it into one of the few genuine British challengers to the so-called Big Six, said the writing had been on the wall for some time. "Energy retail is now more regulated, more capital intensive and increasingly dependent on long-term investment and scale," he said. "In that context, bringing Ovo together with Eon is the right next step for customers, for colleagues, and for the long-term commitment that decarbonisation requires.""

Eon agreed to purchase the retail arm of Ovo Energy in a deal expected to be worth up to £600 million. The transaction will add about four million customers to Eon and raise its UK household coverage to roughly 9.6 million, making it the largest supplier in Britain. The combined business will surpass Octopus Energy, which became the market leader after absorbing Bulb’s remnants in 2022. For Ovo, the sale ends a difficult period marked by warnings of “material uncertainty” and efforts to meet Ofgem’s financial resilience requirements introduced after supplier failures in 2021 and 2022. Ofgem had required Ovo to rebuild its capital buffer under a credible compliance roadmap, and the sale removes that constraint. The founder said energy retail is now more regulated, capital intensive, and dependent on long-term investment and scale.

Read at Business Matters