Merger Talks Between EDP and SSE End Without Agreement

Portugal’s primary electricity supplier, EDP, initiated merger discussions with UK-based peer SSE earlier in the year, but the negotiations did not advance past preliminary stages, sources familiar with the discussions disclosed to Reuters. The potential merger aimed to form one of Europe’s largest utility firms, with a combined market valuation in excess of $44 billion, yet smaller than industry leaders Iberdrola and Enel.

The approach by EDP, which occurred prior to the summer, sought to diversify the company’s regional asset portfolio, according to two insiders. SSE’s executive leadership, however, opted against the merger, choosing instead to focus on the company’s independent growth strategy, these individuals noted. Details regarding the proposal were not made public, and discussions concluded around June, one source indicated, requesting anonymity as they were not permitted to discuss the matter publicly.

Neither EDP nor SSE provided comments on the situation, with SSE stating it does not respond to market speculation. The discussions were reportedly initiated by EDP’s CEO, Miguel Stilwell d’Andrade, who engaged in talks with SSE’s CEO Alistair Phillips-Davies and Chair John Manzoni, another source reported. It remains uncertain whether EDP might revisit this proposal in the future.

The revelation of the discussions led to a 3% rise in SSE’s stock price, while EDP saw a 1.7% increase. The reported merger talks come amid a surge in merger and acquisition activities within the power sector, with global deals reaching nearly $110 billion as of September 24, according to LSEG data, a 43.5% increase from the previous year.

This year has seen mostly smaller mergers in the industry, one of the notable failed attempts being between Abu Dhabi’s TAQA and Criteria over acquiring Naturgy, Spain’s second-largest utility. EDP has notably invested in renewable energies, owning a 71% stake in EDP Renováveis, the world’s fourth-largest renewable energy producer, active across multiple continents.

EDP’s market capitalization stands at $17.5 billion, less than SSE’s $27.05 billion. However, in terms of enterprise value, EDP holds the advantage at $46 billion, as indicated by LSEG data.