Energy giant E.on has announced a proposed takeover of rival Ovo, creating the UK's biggest domestic energy supplier with nearly 10 million customers. The German-owned E.on Next says the mega-deal will strengthen its ability to deliver value for customers and grow its core retail business. There has been growing speculation that struggling Ovo was set to be taken over by one of its rivals.
Market Impact
The deal would see the combined business leapfrog Octopus Energy, which itself overtook British Gas to become the UK's biggest domestic energy supplier. E.on currently holds a 16% market share, while Ovo has 12%. The takeover would give the combined group a 28% share of the market, representing 9.7 million customers, compared to Octopus at 25%. The value of the deal has not been disclosed, but previous reports have suggested Ovo could be worth around £400 million, though others have hinted it could be significantly less.
What It Means for Ovo Customers
For now, nothing will change. The deal requires regulatory approval, and E.on hopes to receive clearance in the second half of this year. While regulators assess the deal, both E.on Next and Ovo customers will see no changes. Existing tariffs will be honoured in full, and service will continue unchanged. The companies will operate as two independent businesses for now. However, no assurances have been provided for what will happen once the takeover is approved.
In a message to customers on its website, Ovo stated: "You don't need to do anything. Your energy supply, your tariff, and the way you interact with us all stay the same. The same teams will continue to support you, just as they do today."
Will the Ovo Brand Disappear?
The Ovo brand will remain for the time being, at least during the regulatory review period. However, speculation suggests the Ovo name may be dropped if and when the deal receives final approval.
Behind the Deal
Ovo was founded by businessman Stephen Fitzpatrick in 2009 with the aim of disrupting the energy market. It purchased SSE's retail energy business in 2019. As a challenger brand, it grew rapidly, but has since come under financial strain, particularly due to changing requirements for suppliers to hold greater funds in reserve.
Ovo said: "Following a review of its strategic options, Ovo concluded that a sale to E.on provides the strongest long-term platform for the business and its customers." Stephen Fitzpatrick added: "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."
What Might Change After Approval?
E.on's announcement emphasises offering more products to customers, such as solar panels, battery storage, and electric vehicle charging. It already provides these along with time-of-use tariffs that reward customers for shifting energy use to off-peak periods. The company states: "Scale amplifies the benefit - for individual customers and for the system as a whole." It adds: "A larger, digitally native E.on UK accelerates the shift to a customer-led energy system, making new energy work for everyone, not just for early adopters."
Chris Norbury, E.on UK's boss, commented: "That is the principle behind this deal. It is not about scale for its own sake. It is about building a retailer with the capability, the technology and the customer base to make new energy work for everyone. We chose Ovo because it's a modern digitally native business with great people and a shared belief that innovation is what can make energy affordable and sustainable for everyone."
