TWO major energy suppliers are in talks about a merger.
If it goes ahead it would create the UK’s third-largest gas and electricity retailer.
Scottish Power, owned by Spain’s Iberdrola, and Ovo Energy are in talks to create a merger.
It would create a company serving more than six million households, Sky News reports.
Talks are still in the early stages, and any formal agreement will take months if it goes ahead.
With Ovo being the larger company, serving four million customers, they are likely to be the acquiring entity.
Iberdrola would potentially contribute cash and remain as a shareholder.
If they do merge, it would create the third-largest supplier, behind Centrica-owned British Gas and Octopus Energy.
Scottish Power currently serves around 2.4 million households.
Alongside the potential merger, Ovo is aiming to raise £300 million from the sale of shares in the company.
Last year the company hired Rothschild to explore options around new investors or a sale.
Rothschild has reportedly contacted financial investors in recent weeks.
Ovo became one of the UK’s leading suppliers in 2020 after it bought the retail supply arm of SSE.
Since Justin King became Ovo’s chair, the company has prioritised repairing its regulatory relationships.
Iberdrola bought Scottish Power in 2007 for over £11 billion.
