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(Alliance News) - SSE has agreed a sale of its Energy Services business, it said Friday, after a long-drawn-out process to find a future for the unit.
Energy Services provides energy to UK householders, under brands such as SSE, SSE Scottish Hydro, SSE Southern Electric, and SSE Swalec.
Ovo Group Ltd is the buyer, at an enterprise value of GBP500 million, made up of GBP400 million in cash for SSE and GBP100 million worth of loan notes.
Ovo had been named by SSE as a potential buyer in August. Ovo's purchase will make it one of the largest energy suppliers in the UK, just a decade after its founding.
SSE expects the deal to complete either towards the end of 2019 or early in 2020, subject to necessary regulatory approvals. It will use the proceeds to reduce debt.
SSE Chief Executive Alistair Phillips-Davies commented: "We have long believed 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."
A potential sale of the business was announced in May, after Energy Services lost over half a million households to other suppliers during its financial year ended March 2019. As well as a sale, a spin-off and listing had been considered.
SSE has been trying to sort a future for Energy Services for over a year. In December 2018, SSE pulled plans to merge the business with Innogy SE's npower, after the two were unable to come to terms.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called 3.0 points lower at 7,341.67
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Hang Seng: up 0.6% at 27,254.90
Nikkei 225: closed up 1.1% at 21,988.29
DJIA: closed up 45.41 points, 0.2%, at 27,182.45
S&P 500: closed up 0.3% at 3,009.57
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GBP: up at USD1.2397 (USD1.2334)
EUR: up at USD1.1093 (USD1.1035)
Gold: down at USD1,505.20 per ounce (USD1,512.20)
Oil (Brent): firm at USD60.22 a barrel (USD59.30)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
China Mid-Autumn Festival. Shanghai market closed. Hong Kong open.
1100 BST Ireland gross domestic product
1100 CEST EU foreign trade
1100 CEST EU labour cost index
0830 EDT US import & export price indices
0830 EDT US manufacturing & trade: inventories & sales
1000 EDT US University of Michigan survey of consumers
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US trade negotiators want to make "meaningful progress" in upcoming talks with China, Treasury Secretary Steven Mnuchin said, one day after conciliatory gestures by both sides boosted hopes of an eventual resolution. Mnuchin said on CNBC he is "cautiously optimistic" about chances for a deal to resolve the conflict, while President Donald Trump hinted at a watering down of his position with the possibility of an interim deal. Washington and Beijing will first hold talks at the deputy level to ensure senior officials who meet later can advance towards an agreement. Trump told reporters he preferred to seal a complete deal, but that he might be willing to consider an interim agreement. "I'd rather get the whole deal done," he said, but noted analysts have been discussing the possibility of an interim deal "meaning we'll do pieces of it, the easy ones first". "There's no easy or hard, there's a deal or there's not a deal. It's something we would consider I guess," he said.
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Trump said he believes that Iran's leadership wants to talk, adding to expectations that he is trying to arrange a summit with his Iranian counterpart at the upcoming UN assembly. "I can tell you that Iran wants to meet," he told reporters at the White House. Trump has repeatedly indicated he is ready to meet with President Hassan Rouhani, who is expected to attend the UN General Assembly in New York this month. However, the Iranians have so far not given a positive response.
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UK Prime Minister Boris Johnson has been warned against breaking the law over Brexit by Speaker John Bercow, who vowed "creativity" in Parliament would scupper a no-deal exit. The warning came as the EU's chief negotiator said there is "no reason to be optimistic" that a new agreement can be brokered before the prime minister's deadline to ask for a delay. Michel Barnier told political leaders in the European Parliament on Thursday that he was unable to say whether contacts with the UK government would result in a deal by mid-October. Commons Speaker Bercow said in a London speech that the so-called Benn Act enforcing the extension means the only possible Brexit outcome is one approved by Parliament.
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BROKER RATING CHANGES
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UBS RAISES PEARSON TO 'BUY' ('NEUTRAL') - TARGET 1000 (915) PENCE
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BERENBERG INITIATES IMI WITH 'SELL' - TARGET 875 PENCE
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JEFFERIES RAISES BRITVIC TO 'BUY' ('HOLD') - TARGET 1000 (880) PENCE
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COMPANIES - FTSE 100
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Hong Kong Exchanges & Clearing is preparing to up its GBP32 billion bid for the operator of the London Stock Exchange, the Financial Times reported. The newspaper said Hong Kong's bid was not well received by London Stock Exchange Group shareholders and as a result, it will increase the cash element of the offer. The GBP32 billion bid is largely made up of HKEX shares, the FT added. The FT said, however, HKEX will not change its bid until LSEG replies to its initial takeover offer, which according to the newspaper will be rejected in the coming days.
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British Airways has begun cancelling hundreds of flights ahead of the next strike by pilots. Tens of thousands of passengers are expected to be affected by the disruption on September 27. The 24-hour walkout follows a two-day strike on Monday and Tuesday when 1,700 flights due to carry 195,000 passengers were cancelled. The dispute over pay involves members of the British Airline Pilots' Association. British Airways, part of International Consolidated Airlines Group, has offered a pay rise of 11.5% over three years, which it says would boost the pay of some captains to GBP200,000, but Balpa says its members want a bigger share of the company's profits.
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COMPANIES - FTSE 250
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Pub chain JD Wetherspoon reported a rise in annual earnings and said that it anticipates a reasonable outcome in the current financial 2020 despite continuing political problems. For the year ended July 28, the company reported 7.2% rise in pretax profit to GBP95.4 million from GBP89.0 million in the year ago period. Revenue rose by 7.4% to GBP1.82 billion from GBP1.69 billion. Same store sales for the period increased by 6.8%, with bar sales rising 5.8%, food sales by 8.3%, slot & fruit machine sales by 10.3% and hotel room sales by 3.9%. Stripping out exceptional items, pretax profit fell 4.5% year-on-year to GBP102.5 million from GBP107.2 million. The company held its full-year total dividend at 12.0 pence per share, after proposing a unchanged final payout of 8.0p
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COMPANIES - OTHER
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Nationwide Building Society echoed other financial services providers in saying it received a higher number of complaints and enquiries than expected about payment protection insurance, as the deadline passed for complaints on August 29. Nationwide now expects a further GBP20 million to GBP50 million will have to be set aside for PPI payments, on top of the GBP159 million that was earmarked in April. The update follows a number of companies making similar statements. An August surge was observed across the industry, with banks such as RBS and Lloyds both reporting a rush of claims leading up to the deadline.
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Recruiter SThree reported a "good" third-quarter performance, with net fees for the quarter ended August 31 rising 4% year-on-year to GBP87.8 million. Adjusted for working day changes, net fee growth was 6%. Growth did slow slightly, with the second quarter and first quarter both achieving 9% year-on-year growth. Asia Pacific & Middle East, the US, and Continental Europe all delivered net fee growth, but the UK & Ireland registered a 7% decline. Chief Executive Mark Dorman said the firm's "unique and specialised" business model has continued to deliver growth, and expectations for its full year remain unchanged.
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COMPANIES - INTERNATIONAL
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Ride-hailing firm Uber Technologies said it upsized its loan note offer to USD1.2 billion to help fund its acquisition of Middle East focused rival Careem. Earlier on Thursday, Uber launched a USD750 million loan note offer to mature in 2027 with proceeds going towards helping to fund its up to USD3.1 billion acquisition of Careem. Subsequently, credit analyst Moody's Investors Service assigned a B3 rating to the debt offer. Later on Thursday, Uber increased this offer to USD1.2 billion with an interest rate of 7.5% due to mature in 2027.
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Friday's Shareholder Meetings
SVM UK Emerging
Panthera Resources
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