CMA probes sale of National Grid gas arm

The Competition & Markets Authority (CMA) has launched an investigation into National Grid’s sale of a majority stake in its gas transmission business to a consortium including Macquarie for £4.2 billion.

The phase one review will run until 22 November, at which point the competition watchdog will decide whether to refer the deal for a more in-depth phase two inquiry.

The agreement to sell a 60% stake in the business to Macquarie and British Columbia Investment Management Corporation (BCI) was first announced in March. At the time the business was valued at £9.6 billion.

Under the terms of the deal National Grid would receive £2.2 billion on completion as well as a further £2 billion in debt financing.

The deal included an option to sell the remaining 40% of the business still held by National Grid to the consortium, which can be exercised in the first half of next year.

At the time of announcement, National Grid said it expected to complete in the second half of 2022, subject to regulatory approval.

National Grid put the gas business up for sale in March 2021 as part of its “strategic pivot” towards electricity with the acquisition of Western Power Distribution (WPD). The latest deal means the proportion of the company’s assets in electricity has grown from c60% to c70%. Last week saw WPD officially re-branded to National Grid Electricity Distribution.

The gas transmission network comprises approximately 7,660 kilometres pipes and 23 compressor stations. The deal also covers national Grid’s metering business, which owns 8.4 million domestic and commercial meters.

Announcing its investigation, the CMA said it was considering whether the transaction may be expected to result in a “substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.

The deal is also being reviewed under the National Security and Investment Act.