Aug. 6, 2001 – Innogy Holdings plc announced a transaction with Northern Electric plc to swap its interest in Yorkshire electricity distribution business and associated debt for Northern Electric’s energy supply business.
This move simultaneously reinforces Innogy’s position as a energy supplier in the UK and enables it to release capital from its regulated electricity distribution interest, Innogy said.
Innogy is selling its 94.75% interest in the Yorkshire electricity distribution business to Northern Electric for the amount that was attributed to that business in its recent acquisition of Yorkshire Power Group Limited. The transaction places an enterprise value of £1,004 million on that business. Northern Electric is also assuming £742 million in net debt.
Northern Electric’s Supply Business comprises approximately 1.57 million customers and will take Innogy’s total customer base to approximately seven million, reinforcing Innogy’s position as a player in the UK energy supply markets. Innogy has agreed to pay £257 million for Northern Electric’s Supply Business including a power purchase agreement, implying a cost per customer of approximately £275.
Commenting on the transaction Ross Sayers, Innogy’s Executive Chairman, said
“This innovative transaction takes us to seven million customers. It establishes Innogy as the number one electricity supplier to households and businesses in the UK and the number two supplier in gas, by volume. We will capitalise on the opportunities and economies of scale that this transaction brings. Selling Yorkshire’s regulated asset based distribution business and reinvesting in supply is consistent with our strategy to become a customer focused integrated energy company.”
“By combining the Northern Electric Supply Business with the existing supply businesses of Innogy we expect to deliver synergy savings of at least £25 million per annum by 2004. This together with the targeted savings from the integration of the Yorkshire supply business is expected to bring the total operational savings of Innogy’s supply operations to at least £60 million per annum within four years. Our focus is now on delivery of the cost savings and further development of the npower brand. Together we believe that these will create real value for our shareholders.”