Ovo Energy is preparing a bid for rival energy supplier Bulb in a move that would strengthen Bristol’s position as one of Britain’s largest electricity and gas suppliers.
Lossmaking Bulb is working with its bankers at Lazard to explore new sources of financing or a deal with a rival supplier to secure its future, while Britain’s energy supply sector is battling record wholesale gas and power prices.
Preparations for an offer for Bulb come after Ovo, which was founded 12 years ago by former city trader Stephen Fitzpatrick to make those known as the “Big Six” energy providers still hungry for further expansion, has two people who was familiar with the matter said.
Ten smaller competitors has collapsed since early August. Further consolidation is expected in the coming weeks, as companies that are insufficiently hedged or financed are struggling to buy the energy they have dedicated to supplying customers, as well as meeting other financial obligations.
Energy regulator Ofgem said on Monday that Eon would take in the 233,000 domestic customers of Igloo, Symbio and Enstroga, which failed last week.
Ovo, which focuses on technology, was driven at the highest level of energy companies last year acquires British household supply company from SSE.
A deal for Bulb, which serves more than 1.5 million households, will increase Ovo’s customer numbers to about 6 million, just second to Centrica.
Ovo, wie se investors include Japanese Mitsubishi, declined to comment on a possible bid for Bulb.
The company announced its financial highlights for 2020 on Monday before publishing its full accounts at Companies House. Fitzpatrick emphasized that Ovo had made strong progress in integrating the SSE business, saying: “We are now well advanced in building a technology-led, low-cost platform that is one in seven households in the UK. serve.”
The company’s revenue rose to £ 4.5bn last year from £ 1.4bn in 2019. However, it made a loss of £ 141m for the year after discussing £ 110m in acquisition and restructuring costs. In May last year it said would abolish 2600 jobs.
At the operating level, which excludes factors such as one-off costs, Ovo’s losses improved to £ 7m from £ 103m in 2019 and the company maintained that it is “expected to continue on this path to strong profits in 2021”.
But an Ovo bid is not the only option on the table for Bulb, according to people familiar with the discussions, who said Bulb is investigating other possible fundraising opportunities.
Octopus Energy, what it is also connected to the light bulb, is one of several companies that have requested access to a data room set up by Lazard.
But people familiar with the discussions say Octopus CEO Greg Jackson, who was assured last week an investment of $ 600 million of Al Gore’s sustainable investment fund, it would be unlikely he would make a formal offer.
Bulb reiterated that it would try ‘from time to time’ to ‘explore different opportunities to fund our business plans’.
“Like everyone in the industry, we monitor wholesale prices and their impact on our business,” he added.
Ovo’s interest in Bulb was first reported by The Sunday Telegraph.