EON SE is exploring a sale of a UK unit supplying energy to large businesses, people with knowledge of the matter said, becoming the latest power company to seek an exit from a sector generating slim returns.
(Bloomberg) — EON SE is exploring a sale of a UK unit supplying energy to large businesses, people with knowledge of the matter said, becoming the latest power company to seek an exit from a sector generating slim returns.
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The German group is working with advisers to gauge buyer interest in Npower Ltd., according to the people, who asked not to be identified discussing confidential information. Npower is one of the largest suppliers to industrial users in the UK and delivered more than 20 terawatt-hours of electricity in 2021, about 6% of the country’s total consumption.
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Discussions about a possible sale of Npower are ongoing and there’s no certainty they’ll result in a transaction, the people said. A spokesperson for EON said the company is focused on serving its customers “during the current market volatility,” declining to comment further.
EON’s deliberations come at a time when energy suppliers are reassessing their relationships with business customers. They’ve been reluctant to lock in contracts because of pricing volatility, while businesses are asking for more “blend and extend” deals to help them spread payments over a longer period.
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Last year, Centrica Plc said it would stop selling power and natural gas to its biggest business customers as surging wholesale energy costs hit profit margins. Scottish Power Ltd. also announced plans to gradually stop supplies to British businesses.
EON warned earlier this month Europe’s energy crisis — exacerbated by the Russian invasion of Ukraine — is not over. In the UK, about 30 energy firms have collapsed after finding it hard to pass on surging wholesale prices to customers.
Marc Spieker, EON’s chief financial officer, said last week that the company’s expectation for adjusted 2023 earnings to remain broadly in line with 2022 “factors in the possibility of a further deterioration in the remainder of the year.”
EON has owned Npower, a former RWE AG subsidiary, since 2020. Npower swung to a loss of £149 million ($185 million) in 2021, according to its latest accounts filed with the UK’s Companies House.
