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National Grid has agreed to buy electricity distribution network Western Power Distribution (WPD) for £7.8 billion, whilst also selling the Rhode Island based Narragansett Electric Company to WPD’s US owner PPL Corporation for $3.8 billion (£2.7 billion).
The group has additionally announced plans to sell a majority stake in its gas transmission business National Grid Gas (NGG). Taken together, National Grid said the transactions will “strategically pivot” its UK portfolio towards power, increasing the proportion of its assets in electricity from roughly 60 to 70 per cent.
Chief executive John Pettigrew said: “The acquisition of WPD is a one-off opportunity to acquire a significant scale position in UK electricity distribution. WPD has a high quality, fast growing asset base and an excellent track record of customer satisfaction, operational performance and financial returns.
“We have received a premium valuation for our Rhode Island business and I am confident that we will also deliver attractive shareholder value from the NGG sale in due course.
“In combination with the continued successful execution of our strategy in the US, establishing National Grid as the leading electricity transmission and distribution operator in the UK will strengthen our long-term growth prospects, enhance our role in the UK’s energy transition and drive long term shareholder value.”
He continued: “As we move our portfolio to higher growth assets, we have taken the decision to sell a majority stake in NGG. Given the strategic nature of its business coupled with its central position in a transition towards a hydrogen economy, it will continue to play a vital role in the UK’s energy system. We expect strong interest when the sale process begins, likely to be in the second half of this year.
“Our vision for National Grid remains unchanged, to be at the heart of a clean, fair and affordable energy future,” Pettigrew added. “With increased exposure to the UK’s electricity sector, these transactions enhance our role in the progress towards net zero, underpinning our core ambition which is to enable the energy transition for all.”
National Grid said it expects the acquisition of WPD to take place within the next four months and the sale of Narragansett Electric Company to be completed before the end of the first quarter of 2022.
To ensure management continuity, National Grid said the chief executive and chief financial officers of WPD will lead the business as part of an enlarged group. It said it also intends to maintain the WPD headquarters in Bristol and offices in other key locations.
The sale process for National Grid Gas is expected to launch in the second half of this year and be completed approximately a year later.
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