NPower firm buys Yorkshire Power

Innogy is better known by its npower brand

The power firm Innogy is buying Yorkshire Power in a deal valued at £1.8bn which sees it become the UK's biggest electricity supplier.

Innogy, part of the former National Power group, said the acquisition also makes it the number two gas supplier in the UK.

The combination of the supply business of Innogy and Yorkshire, together with our nationally recognised brand power, will create a formidable energy supply business

Ross Sawyer
Innogy

The combined group has a total of 5.3 million domestic, business and industrial accounts - with it getting an 11% share of the domestic energy market.

The deal was not welcomed by financial markets, who sent Innogy's shares down 6% because of the belief it had overpaid Yorkshire's current US owners American Electric Power and Xcel Energy.

Critical mass

Innogy, paying £508m cash and taking on £1.3bn of debt, said the deal worked out at about £295 per customer.

"With this one move we achieve retail critical mass with more than 5.3 million customer accounts," said executive chairman Ross Sayers.

Mr Sayers said Innogy would become the UK's biggest electricity and second biggest gas supplier.

"The combination of the supply business of Innogy and Yorkshire, together with our nationally recognised brand power, will create a formidable energy supply business," said Mr Sayers.

The industry players believes that at least five million households are needed as customers for a utility to survive and prosper in the deregulated market place.

Innogy said there were likely to be some job cuts among Yorkshire's 4,000 strong workforce.