PPL will sell its U.K. utility business to National Grid for nearly $11 billion and in turn buy the London-based company’s Rhode Island utility, the companies said Thursday.
The deal will give Pennsylvania-based PPL its first foothold in ISO-NE.
Under the terms of the first agreement, National Grid will acquire Western Power Distribution (WPD) for 7.8 billion pounds ($10.9 billion). PPL last summer announced its plan to sell WPD and focus on its U.S. business. Four distribution network operators serving 7.9 million customers in central and southwest England and south Wales comprise WPD. (See PPL to Sell UK Operations, Focus on US and PPL Close to UK Sale, Ramping up Investments.)
In a separate transaction worth $3.8 billion, PPL will acquire National Grid’s Narragansett Electric Company, a move PPL officials call a “strategic repositioning” to focus solely on domestic energy concerns.
“The strategic transactions we are announcing today immediately unlock value for shareowners and achieve the objectives we set out in launching the process to sell our U.K. utility business,” PPL CEO Vincent Sorgi said. “They will refocus our business mix squarely on strong, rate-regulated U.S. utilities; strengthen our credit metrics; enhance long-term earnings growth and predictability; and provide us with greater financial flexibility to invest in sustainable energy solutions for those we serve.”
The deal will see PPL sell the U.K. subsidiary holding its WPD interests to National Grid in an all-cash transaction of 14.4 billion pounds, including the takeover of about 6.6 billion pounds of debt. The sale is expected to net about $10.2 billion for PPL.
As part of Thursday’s announcement, National Grid also said it will look to sell a majority stake in its U.K.-based National Grid Gas Transmission business.
Sorgi said PPL sees National Grid as a “respected partner” with a track record of successful generation operations in the U.K., positioning them to be able to focus on advancing decarbonization initiatives and to continue WPD’s emphasis on a “strong commitment to employees, customers and the communities we serve in the U.K.”
“We believe National Grid will continue to deliver positive outcomes for all of WPD’s stakeholders,” Sorgi said.
In the separate deal, PPL will acquire Narragansett Electric in a transaction valued at $5.3 billion, including the takeover of about $1.5 billion of Narragansett Electric debt. PPL said it plans to use a portion of the proceeds from the sale of WPD to finance Narragansett’s acquisition.
Narragansett Electric is the largest electricity transmission and distribution service provider in Rhode Island, as well as a natural gas distributor, serving about 780,000 customers.
Sorgi said PPL is “eager to play a key role” in helping to advance Rhode Island’s aggressive decarbonization goals, including a target of 100% renewable energy by 2030. (See RI Seeks to Lead with 100% Renewable Goal and NE Energy Leaders Discuss Paths to Decarbonization.)
“We believe our experience in automating electricity networks can help the state achieve its target of 100% renewable energy by 2030,” Sorgi said. “And we look forward to being a strong community partner in Rhode Island, something that has been a hallmark of PPL for more than a century.”
National Grid CEO John Pettigrew said PPL is “gaining a world-class operation” with its acquisition of Narragansett Electric.
“We are confident in PPL’s ability to continue operating this business in a manner that serves Narragansett Electric’s communities, customers and stakeholders well,” Pettigrew said.
The acquisition of WPD presented a “unique opportunity” for National Grid, Pettigrew said, allowing the company to “achieve scale in U.K. electricity distribution, a key component of our strategy to be at the heart of a clean, fair and affordable energy future.”
“We are pleased that this announcement is enabling two highly motivated operators to connect with two high-quality businesses in furtherance of our respective visions,” Pettigrew said.