Plans for a merger of Npower’s retail business and the domestic supply business of SSE Energy Services have fallen through.
SSE said the merger is “not now in the best interests of customers, employees or shareholders to proceed with the transaction”. The new company “would not be in a position to meet trading collateral requirements in a sustainable way” and would not be capable of listing on the premium segment of Official List and Main Market of the London Stock Exchange.
It went on to say that the planned transaction had affected by the performance of the business and “clarity on the final level of the default tariff cap, changing energy market conditions and the associated implications of these for both the joint business plan and the market in which the business would be operating. These implications meant the new company would have faced very challenging market conditions, particularly during the period when it would have incurred the bulk of the integration costs.”
It said it would pursue a standalone demerger, a sale or an alternative transaction. SSE Energy Services is expected to be profitable and cash flow positive in 2018/19 and 2019/20 and it will be “best positioned to build on this strong performance in a future outside of the SSE group”.