The U.K. Competition and Markets Authority started its due diligence into the proposed acquisition by Ovo Group Ltd. of utility SSE PLC's retail energy business.
Under the deal, OVO Energy Ltd. will buy SSE Energy Services Group Ltd. for £500 million in enterprise value. Ovo Energy will pay £400 million in cash. Once the deal is completed, Ovo Energy will also issue £100 million in loan notes to SSE, which will be due for repayment in 2029 and carry an annual interest rate of 13.25%.
The U.K. competition authority has initiated the first phase of the approval process and invited public comments on the merger deal. A final decision on the first phase of the investigation is tentatively expected by Dec. 18.
The deal is expected to complete by late 2019 or early 2020, subject to approval by the authority. It will catapult Ovo Energy to the forefront of Britain's retail energy market, serving almost 5 million households.