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March 29 (Reuters) – Ovo Energy is planning a takeover of Shell Plc’s (SHEL.L) UK gas and electricity business, a move that would allow the British retail energy supplier to reclaim the No. 2 spot in the British supply market, Sky News reported on Wednesday.
Ovo is expected to propose an indicative offer for Shell Energy Retail Ltd’s (SERL) UK operation, the report added, citing sources. Shell Energy Retail has about 1.4 million customers.
In January, Shell had said it was considering exiting its home energy retail businesses in Britain, the Netherlands and Germany in the wake of “tough market conditions”.
Ovo and Shell declined to comment.
Retail energy suppliers in Europe have struggled over the past year with soaring wholesale prices forcing governments to shield consumers from rising bills.
A successful deal would raise Ovo’s customer base from about 4 million UK households to 5.4 million households, based on information available on Ovo and Shell websites.
This would put Ovo ahead of Octopus Energy, currently the UK’s second-largest supplier, which has nearly 5 million household customers after its takeover of energy supplier Bulb.
It was unclear if Ovo would fund a takeover of the business from existing financial resources or whether it would need to raise new equity or debt, according to the Sky report.
The report said British Gas owner Centrica (CNA.L), the UK’s biggest retail supplier, had also been exploring an offer for the SERL arm, citing industry executives.
Centrica declined to comment.
Shell’s shares were up 1.5% as of 1050 GMT.
Reporting by Muhammed Husain in Bengaluru; Editing by Rashmi Aich and Jane Merriman
Our Standards: The Thomson Reuters Trust Principles.
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