German energy group E.ON has agreed to acquire struggling UK rival Ovo in a deal that would create Britain's largest gas and electricity supplier by number of households served. The combined company will supply approximately 9.6 million customers, surpassing current market leader Octopus, which serves nearly 8 million homes in the UK.
The value of the transaction has not been disclosed, but reports estimate it at around £600 million. E.ON stated that the takeover represents a significant investment in the UK market and is expected to lower bills for customers. The company emphasized that there will be no immediate changes at its domestic energy supply arm, E.ON Next, or at Ovo while awaiting regulatory approval. It stressed that existing tariffs will be honored in full and service will continue unchanged. Clearance for the acquisition is anticipated in the second half of the year.
Job Impact and Integration Plans
E.ON did not comment on the potential impact on jobs. It is understood that once the deal is completed, the German supplier will establish a transformation office to develop integration plans. E.ON believes that a larger customer base enables faster investment in technology, products, and services, which will benefit customers and support the energy transition.
Ovo's Struggles and Sale of Home Services
Ovo, the UK's fourth-largest gas and electricity supplier, also agreed to sell its home services business, which provides boiler insurance and servicing, to Hometree. Ovo was founded in 2009 by green energy entrepreneur Stephen Fitzpatrick as a challenger to the big six energy companies. Fitzpatrick noted that the energy market has evolved significantly, becoming more regulated, capital intensive, and dependent on long-term investment and scale. He described the merger as the right step for customers, colleagues, and the long-term commitment to decarbonization.
In 2019, Ovo became the UK's second-largest energy supplier after acquiring SSE's home energy business in a £500 million deal. However, the company has faced financial difficulties and cast doubt on its future in September. It reported in its financial accounts uncertainty regarding a plan to improve its capital position after failing financial stress tests. Since then, Ovo has cut hundreds of jobs to reduce costs.
Strategic Benefits and Technology
Marc Spieker, chief operating officer commercial at E.ON, stated that the UK is an important growth market for E.ON, particularly for flexibility and customer-focused energy solutions. The planned acquisition strengthens E.ON's retail business. The company will continue Ovo's energy intelligence platform license agreement with software firm Kaluza, which simplifies billing and reduces costs, and may explore using it across the wider E.ON group outside the UK.
Ovo is part of a sprawling empire controlled by Fitzpatrick, including flying taxi firm Vertical Aerospace, Kaluza, and London's Kensington Roof Gardens. Chris Norbury, CEO of E.ON's UK business, highlighted that the deal aims to shift focus from upstream to customers, enabling control and new energy solutions. E.ON Next offers time-of-use tariffs that reward customers for shifting energy use to cheaper, off-peak periods. With about 7 million smart meters installed, E.ON and Ovo together connect more than 60% of their UK customers in a fully digital manner.
