The deal will render the company among the largest electricity retailers in the UK and the second largest gas retailer.
Announcement of the deal led to a fall in value of Innogy’s shares by 5 per cent. Analysts suggested that the company paid too much, around 295 euros for each new customer, when the expected price would have been between 200 and 250 euros.
Even so the deal will lift Innogy’s retail customer base to 5.3 million, exceeding its own target of 5 million four years early.
Under the terms of the deal, AEP will receive $383 million for its entire interest in Yorkshire Electricity while Xcel will receive $343 million and will retain a 5.25 per cent stake, for tax reasons, until October 2002. Innogy has an option to buy the outstanding shares. It will also take on Yorkshire Power’s debt of around $2 billion. The US companies acquired the UK energy company in 1997.
Innogy is expected to sell Yorkshire Power’s 7 per cent interest in the Armada gas fields and surplus office properties, together valued at around $130 million. The customer base acquired by Innogy with Yorkshire Power will bring its retail demand in line with its electricity generating capacity.
