SSE and the owner of Npower have reached an agreement to merge their operations to create a new energy supplier in the UK.
The duo announced on Tuesday that they were in advanced discussions about a tie-up, and on Wednesday said they were pressing ahead with the plans.
The deal will see SSE and Npower's parent company, Germany's Innogy, merge their household energy supply and services business in Britain, turning the Big Six energy suppliers into five.
The new company will be listed on the London Stock Exchange with SSE shareholders holding 65.6% and Innogy 34.4%.
Shareholders in SSE will vote on the deal by July next year, while Innogy has committed to seek the approval of its supervisory board by the end of 2017.
SSE chief executive Alistair Phillips-Davies said: "The scale of change in the energy market means we believe a separation of our household energy and services business and the proposed merger with Npower will enable both entities to focus more acutely on pursuing their own dedicated strategies, and will ultimately better serve customers, employees and other stakeholders."
The announcement comes as Britain's Big Six brace for a raft of regulatory changes after the Government announced last month that a price cap will be imposed on poor-value energy tariffs.
SSE said that the merger will help the firms compete in a "competitive and regulatory environment" as well as realise efficiency savings.
SSE, formerly known as Scottish and Southern Energy, is Britain's second biggest energy supplier and the merged group will serve around 11.5 million customers.
Centrica, Iberdrola (SocttishPower), E.On and EDF make up the remainder of the Big Six.
All have also come under recent pressure from smaller rivals who have been taking customers and market share.
Innogy booked a half-year loss for Npower in August as it grappled with what it called "fierce competition and political pressure".
The German firm said it would attempt to counter "very tense" trading for the UK retail business by driving down costs, but admitted annual earnings would also be stuck in the red.
Confirmation of the merger came as SSE reported a slump in profits for the first half of the year.
Profit before tax was down 40.4% to £402.2 million in the period, with the firm blaming increased capital expenditure.
Adjusted pre-tax profits also fell 13.9% to £409.6 million.
SSE's chairman, Richard Gillingwater, said: "The operating environment continues to present a number of complex challenges to manage, with significant political and regulatory intervention an ongoing feature of the energy sector."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel