National Grid to Sell Key Part of Business to U.K. Government in $827 Million Deal — Update
By Cristina Gallardo and Christian Moess Laursen
National Grid struck a deal to sell the U.K.'s electricity system operator to the government for 630 million pounds ($826.7 million).
The British energy-infrastructure company said Friday that the transaction should be completed on Oct. 1, paving the way for the creation of the National Energy System Operator, a new public corporation that will be responsible for planning the U.K.'s electricity and gas networks, and will also include the current energy industry regulator Ofgem.
In a separate release Friday, the government said the system will help connect new generation projects with the public electricity grid.
The move follows the government's establishment in July of Great British Energy, a clean-energy company launched as part of the ruling Labour Party's energy policy plans.
The electricity system operator employs around 1,000 people and is responsible for operating the electricity system and manage supply and demand across the grid in Great Britain.
The value of the deal looks to be a fair market price, Citi analyst Jenny Ping wrote in a note to clients. Based on Citi's estimate, the regulatory asset base of the unit stood at 425 million pounds in March, implying a 48% premium for National Grid.
The company, which is one of Europe's biggest energy utilities, didn't say whether the proceeds will be used to fund its 60 billion-pound plan for investments in the U.K. and U.S..
It has previously said divestments and a cut to dividends would fund the plan, along a heavily discounted rights issue to raise 7 billion pounds launched in May, which caused shares to drop 11%.
The FTSE 100-listed company operates the in the U.S. states of New York and Massachusetts, and the U.K.
Shares rose 0.1% to 10.39 pounds in early London trading.
Write to Cristina Gallardo at cristina.gallardo@wsj.com an to Christian Moess Laursen at christian.moess@wsj.com
(END) Dow Jones Newswires
September 13, 2024 03:49 ET (07:49 GMT)
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