Royal Dutch Shell (LON:RDSA) has inked a deal to buy UK household energy and broadband provider First Utility, the Anglo-Dutch group has said. The deal will see the FTSE 100 oil major take on Britain’s Big Six energy suppliers.
Shell’s share price has been little changed in London this morning and as of 08:37 GMT stood at 2,455.00p, flat in percentage terms, as compared with a 0.08-percent gain in the benchmark FTSE 100 index. The group’s shares have added a little over 10 percent to their value over the past year.
Shell snaps up First Utility
Shell announced in a statement yesterday that it had signed an agreement to buy 100 percent of First Utility. The deal, which is subject to regulatory and other approvals, is expected to complete next year. The parties have not disclosed the financial terms of the deal.
“The supply and demand of residential energy is rapidly changing, driven by new technologies that enable householders to better manage their energy use, and the need for a low-carbon energy system,” Mark Gainsborough, Shell’s Executive Vice President of New Energies, commented in the statement, adding that the acquisition will enable the Anglo-Dutch energy major “enter a new part of the energy market in the UK and to improve choice for customers by delivering innovative services at competitive prices”.
Pressure on the ‘Big Six’
The Times quoted Darren Braham, one of First Utility’s founders, as commenting that Shell’s entrance would “apply much more pressure on the Big Six”, who are already facing a squeeze on their profits from the government’s proposed price cap.
The acquisition comes after earlier this week, an Italian judge ordered Shell and Eni to stand trial over alleged bribery over the companies’ purchase of Nigeria’s OPL-245 offshore oilfield back in 2011.