National Grid has agreed a deal to buy Western Power Distribution (WPD) – the UK’s largest electricity distribution business – for £7.8 billion.
The group, which helps keep Britain’s lights on and manages the country’s power infrastructure, said it will buy WPD from US energy giant PPL Corporation.
Separate to this transaction, National Grid has agreed to sell The Narragansett Electric Company (NECO) to PPL Energy Holdings, a subsidiary of PPL, for 3.8 billion US dollars (£2.7 billion).
National Grid has also announced that it will commence a process later this year for the sale of a majority stake in National Grid Gas (NGG), the owner of the national gas transmission system.
Completion of the WPD acquisition is expected to occur within the next four months and completion of the NECO Sale is expected to occur before the end of the first quarter of 2022. National Grid expects to launch the sale process for NGG in the second half of this year and complete the sale approximately a year later.
The acquisition of WPD will boost National Grid’s electricity assets from around 60% to about 70% of its overall portfolio.
John Pettigrew, Chief Executive of National Grid, said: “These transactions will be transformational for our UK portfolio. The acquisition of WPD is a one-off opportunity to acquire a significant scale position in UK electricity distribution. WPD has a high quality, fast growing asset base and an excellent track record of customer satisfaction, operational performance and financial returns.
“In combination with the continued successful execution of our strategy in the US, establishing National Grid as the leading electricity transmission and distribution operator in the UK will strengthen our long-term growth prospects, enhance our role in the UK’s energy transition and drive long term shareholder value. Following the completion of these transactions, we will continue to have a diversified portfolio of assets across the UK and US, with a strong asset growth profile that will further underpin our dividend policy for the longer term.
“The acquisition of WPD brings great people and outstanding experience to National Grid and I am hugely excited about building the future together. Our vision for National Grid remains unchanged, to be at the heart of a clean, fair and affordable energy future. With increased exposure to the UK’s electricity sector, these transactions enhance our role in the progress towards net zero, underpinning our core ambition which is to enable the energy transition for all. We look forward to constructive engagement with Ofgem and policymakers, on how best to achieve these common goals in the best interests of all our customers and wider stakeholders.”