E.ON agrees to buy Ovo in deal to create UK’s biggest energy supplier

The German energy group E.ON has agreed to buy struggling UK rival Ovo in a deal that would create Britain’s biggest gas and electricity supplier.The combined company will serve about 9.6 million customers, overtaking the market leader, Octopus, which serves almost 8m households in the UK.The value of the deal was not disclosed, but reports have estimated it at £600m. E.ON said the takeover represented a significant investment in the UK market and would bring bills down for customers.It said there would be no changes at its domestic energy supplying arm E.ON Next, nor at Ovo, while it awaited regulatory approval for the deal, stressing “existing tariffs will be honoured in full and service will continue unchanged”. Clearance of the acquisition is expected in the second half of the year.E.ON did not comment on what the deal could mean for jobs. It is understood that once it has been completed, the German supplier will establish a transformation office to develop the integration plans. It believes that a larger customer base enables faster investment in technology, products and services, which will benefit customers and support the energy transition.Ovo, the UK’s fourth-largest gas and electricity supplier, said it had also agreed to sell its home services business, which provides boiler insurance and boiler servicing, to Hometree.E.ON has about 5.6 million customers in the UK, while Ovo, which was founded in 2009 by the green energy entrepreneur Stephen Fitzpatrick as a challenger to the big six energy companies, has 4 million.Fitzpatrick said the energy market had changed a great deal: “Energy retail is now more regulated, more capital intensive and increasingly dependent on long-term investment and scale. In that context, bringing Ovo together with E.ON is the right next step for customers, for colleagues and for the long-term commitment that decarbonisation requires.”In 2019, Ovo became the UK’s then second-biggest energy supplier after it agreed to buy SSE’s home energy business in a £500m deal that challenged the dominance of the big six energy suppliers.Ovo-energy" class="entity-link entity-organization" data-entity-id="125303" data-entity-type="organization">Ovo Energy, which was founded by Stephen Fitzpatrick, bought SSE’s home energy business in 2019. Photograph: Jeff Overs/BBC/ReutersHowever, it has been struggling financially and in September cast doubt on its future. It said in its financial accounts that there was uncertainty around the plan it had agreed with the regulator to improve its capital position, after failing financial stress tests. Since then, it has cut hundreds of jobs to reduce costs.Marc Spieker, the chief operating officer commercial at E.ON, said: “The United Kingdom is an important growth market for E.ON, particularly for flexibility and customer‑focused energy solutions. The planned acquisition of Ovo strengthens our retail business.”The company will continue Ovo’s energy intelligence platform licence agreement with the software company Kaluza, which simplifies energy billing and reduces costs, and will look into potentially using it across the wider E.ON group outside the UK.Ovo sits within a sprawling empire controlled by Fitzpatrick, including the flying taxi firm Vertical Aerospace, Kaluza and London’s Kensington Roof Gardens.Chris Norbury, the chief executive of E.ON’s UK business, said: “For decades the UK energy system focused too much on those upstream. Now is our opportunity to change that. Solar, batteries, EVs and a retailer built to orchestrate. That is what this deal is about: customers in control and new energy that works for everyone.”E.ON Next offers time-of-use tariffs that reward customers for shifting energy use to cheaper, off-peak periods.With about 7m smart meters installed, E.ON and Ovo together connect more than 60% of their customers in the UK in a “fully digital manner”.