SSE boss urges investors to back Npower merger

SSE’s chairman Richard Gillingwater has urged shareholders to vote through its deal to merge with fellow big six energy supplier Npower.

In a shareholder circular about the proposed deal published yesterday (27 June) he said the move has “strong strategic logic”.

The document included a notice of a general meeting regarding the planned demerger of SSE Energy Services and subsequent combination of the business with Npower Group Limited, which is subject to regulatory approval.

The new company will be an independent energy supply and services business that will “create a new market model”.

It will combine the “resources and experience of two established players with the focus and agility of an independent supplier”, according to the circular.

Shareholders will be asked to approve two ordinary resolutions at the general meeting on 19 July, which will follow SSE’s annual general meeting.

Gillingwater, said: “The board believes that demerging SSE Energy Services and combining it with Npower has strong strategic logic and the potential to drive significant benefits for the business and its customers.

“It believes that a standalone household energy and services business will benefit from its own dedicated board of directors and specialist management team, supported by skilled employees and focused entirely on strategic and operational developments in the energy retail sector, including the competitive and regulatory environment.”

He added: “A standalone business will also have the ability to determine and allocate its own capital, allowing day-to-day decision-making to be more closely aligned with strategy and thereby facilitating the delivery of greater benefits to all stakeholders going forward, including customers and employees.

“The board unanimously recommends that shareholders vote in favour of the resolutions to be proposed at the general meeting.”

Shareholders will be asked to approve:

• the declaration of a special dividend (in kind in the form of shares in the new company) to give effect to the demerger; and
• the waiver of the obligation on Innogy, which owns Npower Group Limited, to make a general offer for all of the issued shares in the new company on completion (under Rule 9.1 of the City Code on Takeovers and Mergers).

SSE shareholders will retain their existing SSE shares and will also hold one share in the new company for every existing SSE plc share they hold at the demerger record time.  The new company will be owned up to 65.58 per cent by SSE shareholders. Innogy will hold 34.42 per cent of the shares in the new company on completion.

The demerger will not become effective unless both resolutions are passed by SSE shareholders. Completion of the transaction and the listing of the new retail energy company are expected to occur in the last quarter of 2018 or the first quarter of 2019.

The circular also confirmed the chief executive designate of the new company, Katie Bickerstaffe, is expected to take up her appointment on 24 September.

Gordon Boyd, the chief financial officer designate of the new company, is expected to take up his appointment on 4 July.

Last month the Competition and Markets Authority (CMA) released a timetable for the second phase of its investigation into the planned merger. A provisional decision, including any required remedies, is expected to be revealed in mid-August.