National Grid to Buy Largest UK Power Distribution Company for $10.89 Billion -- Update

--National Grid is to acquire Western Power Distribution for $10.89 Bln

--The deal with U.S. owner PPL also includes the sale of a Rhode Island utility for $3.8 billion

--National Grid plans to sell a majority stake in the U.K. gas transmission system as it pivots toward electricity

By Jaime Llinares Taboada

National Grid PLC said Thursday that it has agreed to acquire Western Power Distribution and sell the Narragansett Electric Co. in a deal with PPL Corp., and that it plans to sell a majority stake in the British gas transmission system.

The FTSE 100 energy networks company said WPD, the largest U.K. electricity distribution business, is being acquired from PPL for an equity value of 7.8 billion pounds ($10.89 billion). WPD owns four distribution networks in the U.K., delivering power to around 7.9 million customers.

Meanwhile, the Narragansett Electric Co., a Rhode Island utility, is being sold to PPL for an equity value of $3.8 billion, it said.

In addition, National Grid said it will start a process later in 2021 to sell a majority stake in National Grid Gas PLC, the owner of the British gas transmission system. This business had contributed adjusted operating profit of GBP348 million to the group's total of GBP3.31 billion in the year to March 31, 2020.

National Grid said that as a result of these transactions, the proportion of its assets in electricity will increase to around 70% from 60%.

"These transactions will be transformational for our U.K. portfolio. The acquisition of WPD is a one-off opportunity to acquire a significant scale position in U.K. electricity distribution," Chief Executive John Pettigrew said.

"With increased exposure to the U.K.'s electricity sector, these transactions enhance our role in the progress towards net zero, underpinning our core ambition which is to enable the energy transition for all," he said.

National Grid will fund the acquisition of WPD with a GBP8.25 billion bridge financing facility. This will be repaid with the proceeds from the NECO and NGG sales and the issue of new senior debt and hybrid capital securities, the company said.

The acquisition of WPD is expected to close in four months and the sale of NECO is expected to occur by the first quarter of 2022. As for NGG, the group is targeting to launch the sale process in the second half of 2021 and complete it a year later.

Shares at 0853 GMT were down 22.4 pence, or 2.7%, at 809.0 pence.

Write to Jaime Llinares Taboada at [e-mail]; @JaimeLlinaresT

(END) Dow Jones Newswires

March 18, 2021 05:09 ET (09:09 GMT)

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