E.on's takeover of Ovo given green light by UK watchdog

(Sharecast News) - The competition watchdog has backed E.on's acquisition of Ovo, paving the way to create the UK's biggest energy supplier.

The Competition and Markets Authority launched a merger inquiry a month ago, to assess whether the planned tie up would damage competition in the UK domestic energy market. But in a brief update on Thursday, the CMA announced it had opted to clear the takeover, and would not be referring it onto a phase 2 probe. Full details of its decision would be published shortly, it added.

Germany's E.on, which already supplies around 5.6m British customers, first announced plans to acquire smaller rival Ovo - which was founded in 2009 and now has around 4m customers - in May. Financial terms were not disclosed.

The two companies are already the third and fourth largest providers respectively behind Centrica-owned British Gas and market leader Octopus, with around 8m customers.

E.on has called the UK "an important growth market". Speaking when the deal was announced, Marc Spieker, E.on's chief operating officer, said: "The planned acquisition of Ovo strengthens our retail business and underlines our commitment to be the trusted choice our customers.

"Energy flexibility and electrification are becoming increasingly important and are critical to the success of the energy transition."

Ovo said: "We've spent the past 16 years building Ovo into one of the UK's leading energy suppliers. Looking ahead, we believe being part of a larger energy company like E.on is the best way to keep building on that."

The deal is expected to close by the end of the calendar year.

As at 1130 BST, E.on's Frankfurt-listed shares were off 1%.