EON Weighs Sale of UK Business Energy Supplier Npower

By Bloomberg

May 19, 2023

image is BloomburgMedia_RUUKO6T0G1KW01_19-05-2023_11-59-55_638200512000000000.jpg

A logo sits on the exterior the EON SE headquarters in Essen, Germany, on Tuesday, March 13, 2018. EON will shed as many as 5,000 jobs in the deal to take over Innogy SE, a move that marks the biggest shakeup in Germany's energy business in years. Photographer: Jasper Juinen/Bloomberg

EON SE is exploring a sale of a UK unit supplying energy to large businesses, people with knowledge of the matter said, becoming the latest power company to seek an exit from a sector generating slim returns. 

The German group is working with advisers to gauge buyer interest in Npower Ltd., according to the people, who asked not to be identified discussing confidential information. Npower is one of the largest suppliers to industrial users in the UK and delivered more than 20 terawatt-hours of electricity in 2021, about 6% of the country’s total consumption.

Discussions about a possible sale of Npower are ongoing and there’s no certainty they’ll result in a transaction, the people said. A spokesperson for EON said the company is focused on serving its customers “during the current market volatility,” declining to comment further. 

Shares in EON were broadly flat in early trading on Friday. The stock was trading at €11.08 at 9:15 a.m. in Frankfurt, giving the company a market value of €29.3 billion ($31.6 billion).

EON’s deliberations come at a time when energy suppliers are reassessing their relationships with business customers. They’ve been reluctant to lock in contracts because of pricing volatility, while businesses are asking for more “blend and extend” deals to help them spread payments over a longer period.

Last year, Centrica Plc said it would stop selling power and natural gas to its biggest business customers as surging wholesale energy costs hit profit margins. Scottish Power Ltd. also announced plans to gradually stop supplies to British businesses. 

EON warned earlier this month Europe’s energy crisis — exacerbated by the Russian invasion of Ukraine — is not over. In the UK, about 30 energy firms have collapsed after finding it hard to pass on surging wholesale prices to customers. 

Marc Spieker, EON’s chief financial officer, said last week that the company’s expectation for adjusted 2023 earnings to remain broadly in line with 2022 “factors in the possibility of a further deterioration in the remainder of the year.” 

EON has owned Npower, a former RWE AG subsidiary, since 2020. Npower swung to a loss of £149 million ($185 million) in 2021, according to its latest accounts filed with the UK’s Companies House. 

(Adds shares in fourth paragraph.)

©2023 Bloomberg L.P.

By Todd Gillespie, Aaron Kirchfeld , Dinesh Nair

KEEPING THE ENERGY INDUSTRY CONNECTED

Subscribe to our newsletter and get the best of Energy Connects directly to your inbox each week.

By subscribing, you agree to the processing of your personal data by dmg events as described in the Privacy Policy.

Back To Top