SSE’s (LON:SSE) share price has surged in London this morning as the company inked a deal to sell its Energy Services business. Today’s update comes ahead of the FTSE 100 group’s interim results in November.
As of 09:54 BST, SSE’s share price had added 1.80 percent to 1,187.00p, outperforming the broader UK market, with the benchmark FTSE 100 index having slipped into the red and currently standing 0.26 percent lower at 7,325.91 points. The group’s shares have added more than five percent to their value over the past year, as compared with about a 0.8-percent gain in the Footsie.
SSE sells Energy Services business
SSE announced in a statement this morning that it had entered into an agreement to sell its SSE Energy Services business to OVO Energy, a wholly owned subsidiary of OVO Group, at an enterprise value of £500 million, comprising £400 million in cash and the remaining £100 million in loan notes. Completion of the deal is expected late this year or early next year, subject to regulatory approvals.
“Following the transaction, SSE will be able to give an even greater focus to delivering the low carbon infrastructure needed to help the UK reach net zero emissions,” SSE’s chief executive Alistair Phillips-Davies commented in the statement, adding that the group will “have a clear strategy around developing, operating and owning renewable energy and electricity network assets”.
The company said that it will use the net proceeds of the transaction to reduce its net debt.
Analysts on FTSE 100 company
UBS reaffirmed the company as ‘neutral’ this week, trimming its target on the SSE share price from 1,190p to 1,165p, while Morgan Stanley, which rates the FTSE 100 group as an ‘overweight,’ hiked its valuation on the shares from 1,255p to 1,290p. According to MarketBeat, the electricity provider currently has a consensus ‘hold’ rating and an average price target of 1,201.62p.