US firm strikes £3.5bn E.ON deal
Published 02/03/2011 | 03:42
American utility firm PPL has snapped up its second major UK electricity network after striking a deal worth £3.5 billion with Germany's E.ON.
The acquisition of the Central Networks business adds an electrical supply system serving five million customers in the Midlands, including Birmingham and Nottingham, through about 83,000 miles of overhead and underground cables.
Pennsylvania-based PPL already owns Western Power Distribution, which provides regulated distribution through 52,000 miles of power lines to 2.6 million customers in South-West England and South Wales.
With the acquisition of Central Networks, PPL will own and operate what it says will be the largest network of electricity delivery companies in the UK in terms of regulated asset value - a combined £4.9 billion.
The deal, which is expected to complete next month, forms part of E.ON's plan to sell 15 billion euro (£12.7 billion) of assets by the end of 2013 as it looks to cut debt and expand in regions such as Latin America.
E.ON UK chief executive Paul Golby said: "PPL is an excellent partner for Central Networks. They share our goal of providing a safe and reliable service for our customers and our communities."
Central Networks was created following E.ON's purchase of Powergen in 2002 and Midlands Electricity for £1.2 billion two years later. PPL, which will also assume £500 million of debt in the deal, said it expected to generate "significant synergies" from the combined UK operations.
The union Prospect, which represents 800 engineers and staff at Central Networks, broadly welcomed the takeover by PPL Corporation.
Negotiations officer Richard Hardy said: "That PPL is already a player in the UK electricity market is an important issue. We were worried that Central Networks could have been bought by a venture capital consortium with little or no interest in long-term investment, safety or security of supply.
"Western Power have shown that they have a commitment to these issues, as well as a willingness to work positively with unions."