The UK’s energy market is set for another big shake-up with E.on’s announcement of a proposed takeover of Ovo to create what would become one of the UK’s biggest domestic suppliers
Ovo energy’s millions of customers will be left wondering what the planned takeover by E.on will mean for them(Image: Getty Images )
Energy giant E.on is looking to snap-up rival Ovo to create one of the UK’s biggest suppliers, with 13.7 million customers.
German-owned E.on Next says the mega-deal will strengthen its “ability to deliver value for customers and grow its core retail business”. There has been growing speculation that struggling Ovo was set to be taken over by one of its rivals.
The deal would see the combined business roughly match Octopus Energy, which itself overtook British Gas to become the UK’s biggest domestic energy supplier. Industry experts Cornwall Insight reckons the combination of E.on and Ovo would make it the second largest domestic supplier in Britain, with around 25% of the market, just behind Octopus Energy at 26% and 14 million accounts.
The value for the deal has not been disclosed but previous reports have suggested Ovo could be worth £400million, although others have hinted it could be a lot less.
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I’m an Ovo customer, what will it mean for me?
Nothing yet, as the deal will need regulatory approval. E.on says it is hoping for clearance in the second half of this year.
While regulators are assessing the deal, there will be no change to either E.on Next or Ovo customers. That means existing tariffs will be honoured in full and their service will continue unchanged. They will also operate as two independent businesses for now.
However, the firms have provided no such assurances for what will happen as and when the takeover is approved.
In a message to customers on its website, Ovo said: “You don’t need to do anything. Your energy supply, your tariff, and the way you interact with us all stay the same. The same teams will continue to support you, just as they do today.”
Sabrina Hoque, Uswitch energy expert, said: “OVO customers may be nervous about their current energy supply, but nothing should change in the short term, and their service will continue as normal. If the deal is approved, energy supply will continue for all households, and credit balances will be protected as customers are transferred across automatically.
“Ovo customers do not need to do anything, and your supplier will keep you updated on next steps if and when the transaction takes place.
“A merger like this is always a good prompt to check whether you’re on the best deal available. If you’re on a standard variable tariff with either supplier, it’s worth comparing energy deals right now as you may find you can save money by switching to a fixed deal.”
Emily Seymour, energy editor at consumer group Which?, said: “If you’re an Ovo customer, don’t panic, your gas and electricity supply will continue as usual. E.On have assured customers that existing tariffs will be honoured in full and service will continue unchanged. You don’t need to do anything and you’re still able to switch supplier if you wish.”
Will the Ovo brand disappear?
The brand will stay for the time being, or at least when the deal is being reviewed by regulators. However, there has been speculation that the Ovo name will be ditched if and when it gets the go-ahead.
What’s behind the deal?
Ovo was set up by businessman Stephen Fitzpatrick in 2009 to disrupt the energy market. It bought SSE in 2019. As a challenger, it grew rapidly and in 2019 bought SSE’s retail energy business. But it has been under financial strain, especially given changing requirements on suppliers to hold greater funds in reserve.
Ovo said: “Following a review of its strategic options, Ovo concluded that a sale to E.on provides the strongest long-term platform for the business and its customers.”
Stephen Fitzpatrick said: “Energy retail is now more regulated, more capital intensive and increasingly dependent on long-term investment and scale. In that context, bringing Ovo together with E.on is the right next step for customers, for colleagues, and for the long-term commitment that decarbonisation requires.”
What might change if the takeover is approved?
E.on’s confirmation announcement is loaded with talk of offering more products to customers, whether that be solar panels, batteries for energy storage, or electric vehicle charging.
It already offers these, along with time-of-use tariffs that reward customers for shifting energy use to cheaper, off-peak periods. But it adds: “Scale amplifies the benefit – for individual customers and for the system as a whole.”
In its statement, it goes on: “A larger, digitally native E.on UK accelerates the shift to a customer-led energy system, making new energy work for everyone, not just for early adopters.”
Chris Norbury, E.on UK’s boss, added: “That is the principle behind this deal. It is not about scale for its own sake. It is about building a retailer with the capability, the technology and the customer base to make new energy work for everyone.
“We chose Ovo because it’s a modern digitally native business with great people and a shared belief that innovation is what can make energy affordable and sustainable for everyone.”
Industry experts Cornwall Insight reckons the combined E.on-Ovo group will be just smaller than Octopus Energy. However, it added that if the transaction is approved, the three largest suppliers would together account for close to three quarters of total market share.
Tom Goswell, energy supply lead at Cornwall Insight, said: “The proposed deal reflects a market that has changed significantly over the past five years. Higher costs and tighter regulation have naturally favoured suppliers with the scale to absorb them, and E.on acquiring Ovo is a logical step in that direction.
“Larger suppliers can bring stability, resilience, and the ability to invest in the products and services that will matter as households move towards heat pumps, EVs, and flexible tariffs.
“However, as the market becomes more concentrated, it will be important to consider what this means for consumer choice. The conversation for policymakers is making sure that consolidation and competition aren’t mutually exclusive, because households will need both stability and choice as the market evolves.”
