German energy group E.ON has agreed to acquire struggling UK rival Ovo in a deal that would create Britain's largest gas and electricity supplier by number of households served.
Deal Details
The combined company will supply approximately 9.6 million customers, surpassing market leader Octopus, which serves nearly 8 million homes in the UK. The value of the deal has not been disclosed, but reports estimate it at around £600 million. E.ON stated that the takeover represents a significant investment in the UK market and is expected to lower bills for customers.
E.ON confirmed that there will be no changes at its domestic energy supply arm, E.ON Next, or at Ovo while awaiting regulatory approval. The company stressed that existing tariffs will be honoured in full and service will continue unchanged. Clearance of the acquisition is anticipated in the second half of the year.
Impact on Jobs and Operations
E.ON did not comment on potential job implications. It is understood that once the deal is completed, the German supplier will establish a transformation office to develop integration plans. E.ON believes that a larger customer base enables faster investment in technology, products, and services, which will benefit customers and support the energy transition.
Ovo, the UK's fourth-largest energy supplier, has also agreed to sell its home services business, which provides boiler insurance and servicing, to Hometree.
Background
E.ON has approximately 5.6 million customers in the UK, while Ovo, founded in 2009 by green energy entrepreneur Stephen Fitzpatrick as a challenger to the big six energy companies, has 4 million customers. Fitzpatrick noted that the energy market has changed significantly, stating: “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.”
In 2019, Ovo became the UK's then second-biggest energy supplier after agreeing to buy SSE's home energy business in a £500 million deal. However, the company has been struggling financially and in September cast doubt on its future. Its financial accounts revealed uncertainty around a plan agreed with the regulator to improve its capital position after failing financial stress tests. Since then, Ovo has cut hundreds of jobs to reduce costs.
Statements from Executives
Marc Spieker, 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.”
The company will continue Ovo's energy intelligence platform licence agreement with software company Kaluza, which simplifies energy billing and reduces costs, and will consider using it across the wider E.ON group outside the UK.
Chris Norbury, Chief Executive of E.ON's UK business, commented: “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. With approximately 7 million smart meters installed, E.ON and Ovo together connect more than 60% of their UK customers in a fully digital manner.
