National Grid will buy Britain’s largest electricity distribution business, WPD, from US company PLL for 7.8 billion pounds ($10.9 billion) in a move to shift from using natural gas to using electric power to support the cause of climate change.
National Grid said it would sell its NECO project to PPL for $3.8 billion, and both companies said the WPD deal would value them at around £14.4 billion, with the amount including £6.6 billion in debt.
National Grid shares are down 3% to trade around £8.1, making it one of the biggest losers in the British blue-chip index.
National Grid supplies natural gas and electricity to millions of its customers, and said the previous two deals would increase its share of its electricity insurance assets from 60% to 70%, as WPD’s four Distribution Network Operators (DNO for short) supply electricity to about 7.9 million customers and more than 6,500 employees.
National Grid will maintain WPD’s headquarters in Bristol in western Britain. WPD is the largest operator of single power grids in Britain, but given the country’s competitive and fragmented market, it does not sell its services directly to end consumers.
National Grid owns another part of the power system, which is a high-voltage switching grid that takes power from stations and recycles it across the country.
The company plans to invest 10 million pounds in the network over the next five years, knowing that its business was significantly affected during the pandemic crisis after the decrease in energy consumption by the commercial and industrial sector.
The company expects to sell its majority stake in National Grid Gas, which owns the national gas transportation system, this year.