Energy giant SSE has announced it will sell off its supply arm to Ovo Group for £500 million.
The deal will see Ovo Group, a subsidiary of Ovo Energy, pay the sum through £400m in cash and £100m in loan notes.
The deal is expected to be completed in late 2019 or early 2020.
SSE is the third largest supplier in the UK energy market, with around 3.5 million household customers and 8,000 staff.
Ovo is the UK’s largest independent energy supplier, with 1.5 million customers and about 2,000 employees.
SSE said the deal will be used to reduce the firms overall debt.
Alistair Phillips-Davies, chief executive of SSE, said: “We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders – and this is an excellent opportunity to make that happen.
“Ovo shares our relentless focus on customer service and has a bold vision for how technology can reshape the future of the industry.
“I’m confident that this is the best outcome for the SSE Energy Services business.”
SSE, through its clean energy arm SSE Renewables, has recently completed the 84-turbine Beatrice Offshore Wind Farm in the Outer Moray Firth, with five more giant wind projects planned off the east coast of Scotland.
The firm said today’s deal will allow it to focus on its renewable energy plans.
Mr Phillips-Davies added: “Following the transaction, SSE will be able to give an even greater focus to delivering the low carbon infrastructure needed to help the UK reach net zero emissions.
“We have a clear strategy around developing, operating and owning renewable energy and electricity network assets, along with growing businesses complementary to this core.
“With a large and growing renewable energy pipeline and a leading position in the electricity networks needed to deliver low-carbon energy reliably to homes and businesses in an increasingly electrified economy, we are well placed to create value from the low-carbon transition.”
Stephen Fitzpatrick, chief executive and founder of Ovo Energy described the deal as a “significant moment for the energy industry.
