PPL to acquire E.ON's UK grid networks for GBP3.5bn

US utility PPL is to acquire E.ON's UK power networks for GBP3.5bn ($5.7bn) in cash to create one of the largest electricity distributors in Britain.
 
Reuters reports that PPL, which beat a rival bid from Hong Kong billionaire Li Ka-Shing according to people familiar with the matter, would also assume GBP500m of debt.
 
The deal, expected to close in early April, would create the largest network of electricity delivery companies in Britain in terms of regulated asset value, at a combined $7.8bn, PPL said in a statement.
 
The E.ON business, called Central Networks, is the UK's second-largest electricity distributor and delivers power to over 5m customers. It would add to PPL's existing pool of 2.6m customers in South West England and South and West Wales.
 
The acquisition furthers PPL's move into steadier, regulated power provision and away from the competitive business of power generation. Units with regulated returns made up just 27 per cent of earnings in 2010, but helped by the earlier E.ON deal, were already forecast to make up half of this year's earnings.
 
The sale would also be an important milestone for E.ON, which is shedding some 15 billion euros of assets. It would mark the second big deal with PPL, after the latter bought E.ON's Kentucky-based power unit last year for $6.7bn in cash.
 
Hong Kong's Li had also pursued the E.ON assets to add Britain's second-biggest electricity distribution network to the largest, which he bought last year from EDF of France. PPL's bid succeeded because it offered a higher price, not because Li's rival bid posed bigger competition problems, a person familiar with the matter said.
 
Two days ago, the Sunday Times reported Li was the frontrunner after his investment arm, Cheung Kong Infrastructure Holdings, outbid PPL. But it said his bid "could be tripped up by competition concerns.
 
E.ON CEO Johannes Teyssen said the purchase price represents "excellent value" for the company and the proceeds of the sale would increase its financial flexibility and strengthen its balance sheet.
 
E.ON put the UK networks up for sale in December as part of a promise to investors that it would divest assets worth EUR15bn through to 2013, in order to guarantee minimum dividends while it builds up new markets.
 
For more business news, click here

Sponsored by FLSmidth

Related Articles

Video: Duke Energy acquires Halifax Solar Project in North Carolina

Duke Energy Renewables (NYSE: DUK) has acquired a 20-MW solar project in Roanoke Rapids, North Carolina, from Geenex and ET Solar Energy Corp.

Tucson Electric acquires stake in Gila gas power plant

Tucson Electric Power (TEP) has acquired a portion of the output generated by the Gila River Power Station, a natural gas facility.

Follow Power Engineering on Twitter

Latest News

Shutterstock coal production trucks

Weekly Coal Production

The Weekly Coal Production shows how much coal is being produced across the U.S.

Federal Reserve Bank of Dallas Weekly Economic Indicators financial business

The Federal Reserve Bank of Dallas' Economic Indicators

The Federal Reserve Bank of Dallas offers a glimpse into how the markets are doing domestical...

Kvaerner awarded contract for gas-fired power plant in Delaware

Kvaerner North American Construction Inc. and its joint venture partner, Parsons Brinckerhoff...

Canadian Solar purchases two solar projects

Canadian Solar Inc. has acquired a majority interest in two utility-scale solar power project...

Operators Restart Unit 2 at PPL Susquehanna

Unit 2 at the PPL Susquehanna nuclear power plant near Berwick, Pa. resumed generating electr...

Settlement agreement limits cost recovery at Edwardsport

The Indiana Utility Regulatory Commission (IURC) on Dec. 27 modified and approved a settlemen...

Toshiba in talks to sell portion of Westinghouse nuclear unit

Toshiba Corp is in talks  to sell up to 16% of its stake in the Westinghouse Electric Co...

Utah nixes nuclear waste storage facility

Plans to park radioactive waste at a storage facility in Utah have been officially called off.

Power Engineering Current Issue

03/01/2014
Volume 118, Issue 3
1403PE-cover

Products Showcase

Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013

Buyers Guide Categories

Power Industry Wire News

Rockdale Resources Enhances Operations, Implements Cost Reductions and Changes Board Composition

Rockdale Resources Enhances Operations, Implements Cost Reductions and Changes Board Co...

Cardinal Energy Group, Inc.: Bradford Lease Drilling Report

Cardinal Energy Group, Inc.: Bradford Lease Drilling Report

MDU Places Dakota Natural Gas Pipeline on Hold, an Industrial Info News Alert

MDU Places Dakota Natural Gas Pipeline on Hold, an Industrial Info News Alert

Top Industrial Market News Stories for the Third Week of December 2014, an Industrial Info News Alert

Top Industrial Market News Stories for the Third Week of December 2014, an Industrial I...

American Leisure Holdings, Inc. Reports on Wholly Owned Subsidiary Financials

American Leisure Holdings, Inc. Reports on Wholly Owned Subsidiary Financials

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>