Merger talks could result in Britain’s largest utility

ScottishPower and Scottish & Southern Energy (SSE) have held talks about a £20bn merger, which could create Britain’s biggest utility company.
The talks are thought to have taken place this summer in the form of a number of meetings between chief executive of ScottishPower Philip Bowman and his peer at SSE, Ian Marchant. Although the talks were aborted without reaching an agreement, analysts believe a merger is the next logical step.
ScottishPower has a market value of just under £9.5bn while SSE was valued at £10.7bn. If completed, the merger would create an energy company worth twice as much as Centrica – the owners of British Gas.
It is thought regulatory issues have caused a problem in bringing the two companies together. It is likely that concessions will be required by competition authorities and industry regulator Ofgem.
ScottishPower has already been the target of a cross-border takeover approach. Last year German firm E.ON, which owns Powergen, created an offer that was later rejected by Bowman’s predecessor Ian Russell. Russell was ousted from the company in January this year, in what many believe was a knock-on effect from his refusal of the take-over bid. Many analysts have viewed the appointment of Bowman as a precursor to the deal between ScottishPower and one of its British or overseas rivals.