Engie Jumps After £10.5 Billion Deal to Buy UK Power Networks
(Bloomberg) -- Engie SA shares rose as much as 7.6% after it agreed to buy the UK’s largest power-distribution network for £10.5 billion ($14.2 billion) from Hong Kong billionaire Victor Li’s CK Group.
The French utility will acquire UK Power Networks as it seeks to capitalize on an expected surge in demand from electric vehicles and data centers and to diversify beyond domestic gas networks. The transaction, expected to close in mid-2026, will make the UK Engie’s second-largest earnings contributor after France, according to chief executive officer Catherine MacGregor.
“It is not frequent to see a deal where a company pays a reasonable price for a quality asset that results in both a qualitative, but also a quantitative improvement in earnings. But we believe this is what the acquisition of UKPN means for Engie,” analysts at JPMorgan said in a note.
Power grids worldwide are rolling out huge investment programs to connect wind and solar projects while accommodating new electricity-intensive demand from artificial intelligence, electrified transport and heat pumps. In the UK, distribution networks, which carry power from high-voltage transmission systems to homes and businesses, are key to that expansion.
Engie said it will finance the acquisition with roughly €5 billion ($5.9 billion) of debt and hybrid securities and €4 billion from asset disposals. It also plans to raise as much as €3 billion in equity through an accelerated bookbuild to preserve its investment-grade credit rating.
Engie shares were trading 7.2% higher at €29.52 at 10:04 a.m. in Paris. They are up 32% this year to a 15-year high, giving it a market value of almost €72 billion.
The long-term growth profile of the deal could add 3-4% to earnings per share for Engie by 2028, according to Citigroup Inc. For the Li family, the sale is part of a broader program to shed assets that are exposed to growing political risk. The family also believes that carving up its businesses unlocks far greater value than the market currently assigns them under the existing structure.
Several analysts including Citi noted that the transaction value was high compared to historical deals for regulated assets in the UK. The transaction suggests industry players are willing to pay premium for growth, analyst Piotr Dzieciolowski said.
Across Europe, network constraints are emerging as a key friction point in the push to electrify and decarbonize the economy. Regulated grid assets offer stable, inflation-linked returns, making them particularly attractive to long-term infrastructure investors.
The deal underscores Engie’s strategy of shifting toward regulated infrastructure and long-term contracted renewables as it reduces exposure to more volatile fossil fuel-linked activities. It’s expected to boost net recurring income to within the range of €4.6 billion to €5.2 billion in 2026, €400 million higher than previously forecast, and to as much as €5.8 billion in 2028, Engie said.
Britain aims to decarbonize its power system by 2030, one of the most ambitious targets in Europe. At the same time, developers face mounting delays in securing grid connections. Data centers alone are adding enormous pressure: a single 100-megawatt facility can consume as much electricity as 260,000 homes, according to Aurora Energy Research Ltd.
Grid assets sales are rare. Less than two years ago, Engie was outbid by Spanish rival Iberdrola SA for the purchase of British regional power network Electricity North West Ltd.
CK Group has explored a sale of its UK distribution business for at least four years. In 2022, it held talks with a consortium led by Macquarie Group Ltd. and KKR & Co.
UK Power Networks is owned by CK Infrastructure Holdings Ltd. and Power Assets Holdings Ltd., which each hold 40%, with CK Asset Holdings Ltd. owning the remaining 20%, according to the company’s website.
Separately, Engie reported a 12% drop in net recurring income to €4.9 billion after shutting three nuclear reactors in Belgium and dealing with lower French hydropower output and weaker power prices. The company proposed a dividend of €1.35 per share, down from €1.48 a year earlier.
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