Ovo Energy , one of Britain's biggest energy suppliers, is on the cusp of being bought by German rival E.ON as the company races to secure its future.
Plans to combine the two Big Six energy providers would form the biggest household supplier in the country by customer numbers, marking the sector's biggest deal in decades
Sales talks have been accelerating of late and a deal is said to be possible within weeks, though it is not yet certain, according to Sky News. It is unclear if the Ovo Energy name would disappear from the market.
Ovo Energy, which was founded by billionaire Stephen Fitzpatrick in 2009, became one of Britain's biggest suppliers in 2020 after it acquired SSE's retail business for £400m.
But it has been plagued by financial problems, reporting a net loss of £135m in 2024. Last year, it warned that a "material uncertainty" hung over its future because it was having difficulty meeting financial resilience targets set by regulator Ofgem.
It has also racked up £17m in regulatory fines in the last decade, including a £2.7m charge earlier this year for failing to pass on government support payments quickly enough.
Ovo Energy has been struggling for months to source a cash injection or sell its retail business to save its future. Last year, David Buttress, its chief executive, stepped down and the firm axed hundreds of jobs in an effort to reduce costs.
Mr Fitzpatrick is also the owner of luxury private members' club Kensington Roof Gardens, which posted a £26m loss in December.
A deal with E.ON will dash Mr Fitzpatrick's hopes of regaining control of Ovo after he failed to convince other shareholders of his plans to inject £200m into the business.
A merger between E.ON and Ovo Energy would create a giant supplier with around 9.7 million customer accounts. This means they would surpass Octopus Energy, which has more than eight million, as Britain's biggest household supplier.
Ashley Kelty, analyst at Panmure Liberum, said: "It would be the biggest deal in at least a generation. There hasn't been consolidation on that scale for a long time."
The two companies combined would become the largest provider of domestic electricity, covering 28pc of the UK market.
However, the company would still only be the third largest provider of domestic gas, covering 23pc of the market, after Octopus and British Gas, which cover 27pc and 25pc respectively.
The deal comes as households are about to get hit by a £280 surge in energy bills as the war in Iran drives up oil and gas prices.
The energy price cap, which is the maximum amount energy suppliers can charge per unit of energy set by regulator Ofgem, is expected to rise by 18pc in July, taking annual energy bills for a typical household from £1,641 to £1,929. Ofgem will announce the next price cap level by May 27.
E.ON and Ovo Energy will likely be able to make significant cost savings from the merger, but customers are unlikely to see this translated into cheaper energy bills because the companies' profit margins are slim, Mr Kelty said.
E.ON has about 5.7 million customers, while Ovo Energy has four million.
It is not yet clear whether E.ON will face competition in its takeover plans. French utility provider EDF Energy and London-listed Telecom-plus had also previously reportedly expressed interest.
However, it is understood that EDF has effectively ruled itself out of the running and has not held talks with Ovo since earlier this year.
Martin Young, founder of utility policy consultancy Aquaicity, warned that many of these households may be unhappy at the prospect of a new overhaul of their energy supplier and Ovo could lose customers as a result.
Mr Young said: "A decent chunk of Ovo's customers will have been with SSE and might be apprehensive about going through another integration, given that these aren't necessarily straightforward.
"There is a possibility of customer loss, particularly at this time of energy market volatility, where the summer price cap could be a trigger point for customer switching."
E.ON and Ovo Energy declined to comment.
