SSE Scraps Merger Plans

Energy provider SSE announced on December 17 to scrap plans to merge with NPower. SSE's board is now considering other options

Tancrede Fulop 18 December, 2018 | 7:30AM
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energy provider SSE has announced plans to scrap merger with NPower

SSE (SSE) and Innogy announced on December 17 that they will scrap their plan to merge their UK retail energy activities. They were unable to reach an agreement on "revised commercial terms" to provide sufficient cash collateral to get an "appropriate credit rating" against a tough backdrop marked by the default tariff cap and fierce competition. We reiterate our fair value estimate of £13.80 per share and our narrow moat, stable trend ratings for SSE.

The deep undervaluation of the shares offsets the current uncertainties and offers an attractive reward/risk profile, in our view.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
SSE PLC1,522.00 GBX1.57Rating

About Author

Tancrede Fulop  is an Equity Analyst for Morningstar

 

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