London: SSE Plc, Britain’s second-biggest energy supplier, agreed to sell a 16.7 per cent stake in its Scotia Gas Networks distribution business to the Abu Dhabi Investment Authority.
The £621 million ($755 million) sale will be completed by the end of this month, SSE said Monday in an emailed statement. The Perth, Scotland-based company, which will keep a 33.3 per cent equity stake in Scotia Gas, will outline its plans for the proceeds in an interim results statement on November 9.
The deal follows a slump in profit at SSE and a write-down of power-generation and natural gas production assets by almost £1 billion. The company purchased a 50 per cent stake in Scotia Gas in 2005 for £505 million. The transaction is expected to be completed by the end of this month, with the consideration being settled in cash.
The agreed price is higher than expected and “this should be taken as a positive by the market,” John Musk, a utilities analyst at RBC Europe Ltd., said in an emailed note.
After completing the sale, SSE will have an ownership interest in five energy networks valued at more than £7 billion. The company expects this to increase, following investment, to almost 8.5 billion pounds by March 2018.
SSE shares dropped 0.3 per cent to 1,542 pence as of 8:39am local time. The UK’s FTSE 100 Index fell 0.5 per cent.
If proceeds from the transaction are returned to shareholders, “it could provide a short-term positive catalyst for the share price,” Jefferies International Ltd. said. “We continue to believe that SSE faces headwinds in its domestic energy supply and power generation business at a time of heightened policy risk in the UK.”