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This week Ovo Energy will bid to take over rival Bulb in a bid to create the second largest supplier in the crisis-hit British energy market.
Sky News has learned that Ovo, which joined the ranks of the largest players in the market when it completed the acquisition of the SSE retail customer base nearly two years ago, is putting together a bid for Bulb with the support of Mitsubishi, its largest shareholder.
Industry executives said Bulb’s advisors at Lazard have set a Wednesday deadline for bids as it seeks new funding sources.
The deal will add 1.7 million Bulb customers to 4.5 million Ovo households, creating the second player behind British gas company Centrica.
Government fund to help reduce energy expenditures
The Telegraph reported on Sunday that Ovo is “spinning” around a bulb, but people close to the situation said Monday that it intends to submit a corporate bid, although it is not binding, before the deadline.
Octopus Energy is also considering an offer to buy Bulb, although it was not clear on Monday whether it plans to make a formal offer.
The crisis in the UK energy market has caused the demise of more than six companies in recent weeks, with Octopus acquiring the largest customer base – Avro Energy.
Sky News revealed last week that Ofgem, the industry regulator, has hired restructuring experts from Teneo to act as special officer for a large supplier if it cannot be resolved through the Industry’s Last Resource System (SOLR).
A spokeswoman for the regulator said: “Ofgem and the government prepare for a wide range of scenarios and have long-term contingency plans in place for any situation as needed. These include speaking to a range of organizations.”
Hurdles remain for Ovo or Octopus’ acquisition of Bulb, including the size of Bulb’s customer commitments and future payments under the government’s renewable energy schemes.
Three other energy companies have stopped trading
However, the acquisition would mark a coup for Ovo founder Stephen Fitzpatrick, who has developed the company from scratch since its founding in 2009.
Its integration with SSE is said to precede the internal plans, which puts it in a good position to consider the Bulb Scale acquisition.
Some suppliers have been pleading with the government to remove the industry’s price cap, an idea that Business Minister Kwasi Quarting has rejected.
The government will not bail out failed energy companies
There is now widespread expectation that the energy price cap, which rose to £1,309 for prepaid customers at the start of this month, will have to be raised significantly again when it is reviewed in the spring of 2022.
A Bulb spokesperson said: “From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and reduce CO2. Like anyone in the industry, we monitor wholesale prices and their impact on our business.”
Bulb, like Octopus Energy, was founded in 2015 and has grown rapidly by offering deals at competitive rates.
E.ON Next, the new brand with customers from E.ON and npower, has around 5.2 million residential customers, while British Gas remains the market leader with around 7 million customers.
EDF Energy, the French state-owned provider, and Scottish Power make up the remaining members of the former “Big Six”.
Ovo declined to comment.
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Sources 2/ https://news.google.com/__i/rss/rd/articles/CBMibGh0dHBzOi8vbmV3cy5za3kuY29tL3N0b3J5L292by10by10YWJsZS1iaWQtZm9yLWJ1bGItYW1pZC1zY3JhbWJsZS1vdmVyLXN0cnVnZ2xpbmctZW5lcmd5LXN1cHBsaWVycy0xMjQyNTc3NtIBcGh0dHBzOi8vbmV3cy5za3kuY29tL3N0b3J5L2FtcC9vdm8tdG8tdGFibGUtYmlkLWZvci1idWxiLWFtaWQtc2NyYW1ibGUtb3Zlci1zdHJ1Z2dsaW5nLWVuZXJneS1zdXBwbGllcnMtMTI0MjU3NzY?oc=5 The mention sources can contact us to remove/changing this article |
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