PPL Corporation has appointed advisors to find a buyer for Western Power Distribution (WPD).
Pennsylvania-based PPL, which has owned WPD for 20 years, is aiming to secure a deal in the first half of next year.
In an announcement this afternoon, PPL said it was launching the sales process in order to position itself as a purely US-focussed utility holding company and that the decision followed a comprehensive strategic review. JP Morgan has been brought onboard as advisor.
The company said it expects to receive a variety of offers, including all cash or a combination of cash and US utility assets.
It pointed out that a sale in the short term would give the new owner the opportunity to influence WPD’s business plan for RIIO2, which needs to be filed by the middle of next year.
Vincent Sorgi, PPL president and chief executive, said: “We believe there is an opportunity to unlock significant value for PPL shareowners through the sale of WPD and the strategic repositioning of PPL’s portfolio to be fully US-based
“WPD is a very strong business that continues to perform exceptionally well as the premier distribution network operator (DNO) group in the UK, but we believe it continues to be undervalued by the market as part of PPL.”
He added: “Ultimately, we believe the divestment of WPD will simplify PPL’s business mix, provide the company greater financial flexibility and create a sharpened focus on building tomorrow’s energy infrastructure and advancing a cleaner energy future in the US.”
WPD comprises four DNOs serving the East and West Midlands, South West and South Wales, serving almost eight million customers overall.
In a statement confirming PPL’s announcement, WPD said: “We will continue to focus on delivering excellent service for our customers while the sales process takes place. PPL’s announcement today is the start of that process and therefore no further details are known at this stage.
“WPD has consistently delivered the best network performance and customer service of any network provider in the UK. Whoever purchases the company will gain a dedicated workforce that is committed to achieving a gold standard of service for its customers, first time, every time.”
In the financial year to March 2019, WPD had a regulatory asset value of £7.7 billion. In the same year it made a £733 million pre-tax profit off a revenue of £1.7 billion.