British Energy buys Swalec for pounds 105m
Thursday 24 June 1999
Including liabilities relating to Swalec's long-term power purchase agreements, the overall cost of the deal works out at about pounds 180m or just under pounds 180 per customer.
This is similar to the price that Electricite de France paid for the supply business of Sweb earlier this month but it is pounds 20-pounds 30 more per customer than National Power paid for the Midlands Electricity supply business.
The Swalec deal means that each of Britain's six big electricity generators owns a supply business and is likely to hasten the consolidation of the industry.
British Energy bid unsuccessfully for London Electricity and the supply business of Sweb, both of which were acquired by EdF. But its chief executive, Peter Hollins, said the Swalec deal was better value than Sweb because it included both gas and electricity customers. Swalec has 980,000 electricity customers and 320,000 gas customers and its supply arm made an operating profit of pounds 26m last year.
Mr Hollins described the Swalec acquisition as British Energy's "first step" in building a national electricity and gas supply business. He confirmed that the group was interested in buying another supply business or an entire regional electricity company, including the distribution business, but said it was not in any current negotiations.
The Swalec disposal will help ease Hyder's debt burden but it is still facing tough new curbs on its water charges, which the chief executive, Graham Hawker, has warned could make the business "unbankable".
British Energy's annual report shows that Mr Hollins was paid pounds 372,000 last year.
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