The deal between challenger brands Octopus and Co-op Energy could be worth as much as £60 million, Utility Week understands.
Early reports have valued the deal at around £30 million, but industry sources have suggested it could be between that and £60 million. Some of this is likely to take into account factors such as existing credit balances or renewables obligation payments.
The partnership between the two companies takes Octopus’ customer numbers up to 1.2 million, with the company now in charge of around 2.1 million accounts.
Under the agreement the Co-op brand will be retained and the Midcounties Co-operative will keep responsibility for customer acquisition as part of its wider utilities strategy, which now includes telecoms in addition to electricity and gas supply.
Customers of GB and Flow will now become Octopus Energy customers, while all existing and new customers will be managed under Octopus’ proprietary tech platform Kraken.
Meanwhile Ian Barker, managing partner at Bfy Consulting, told Utility Week that this is “unlikely to be the last consolidation this year”.
He added: “The deal looks very similar to the Co-op brand to the Marks and Spencer white label Octopus took over mid last year from SSE, with Co-op as the ‘database owner’ for their branded customers – who are all likely Co-op ‘members’ and users of wider group products and services.
“The GB and Flow customer books appear to have been sold and will be absorbed into the Octopus brand.
“Migrating away from three billing systems into the Kraken will support cost to serve improvements. When run well, these migrations can be relatively pain free.”
Speaking as part of the announcement this morning (29 August) Octopus Energy’s chief executive, Greg Jackson, said: “This acquisition and our ongoing partnership with Midcounties is another step on the road to improving the domestic energy market for good.
“Our renewable energy supply and outstanding technology is now delivering award winning service to over a million homes in the UK with 100 per cent green electricity as standard. Co-op is one of the most well-respected British brands and we’re delighted to be working with them alongside our other cherished partners.
“I am also very excited about our joint venture for community energy. We have been hugely impressed by Co-op Energy’s achievement in this area and we believe that together we can help even more people from across the UK to come together in developing new sources of sustainable power.”
Greg Jackson, will be speaking at this year’s Utility Week Congress in Birmingham.