PPL deal sells U.K. utility, buys Rhode Island one

Stacy Wescoe//March 18, 2021

PPL deal sells U.K. utility, buys Rhode Island one

Stacy Wescoe//March 18, 2021

Allentown’s PPL Corp. is officially getting out of the power business in the United Kingdom, while bolstering its presence in the United States.

The company announced today that it has agreed to sell its U.K. utility business, Western Power Distribution, to National Grid plc for £7.8 billion, or around $10.8 billion in U.S. dollars.

At the same time, in a separate deal PPL said it plans to acquire National Grid’s Rhode Island utility business, the Narragansett Co. for $3.8 billion.

In a release, the company said this would transform PPL into a “high-growth, purely U.S.-focused energy company.”

The agreements with National Grid follow PPL’s announcement in August 2020 of plans to sell WPD, which comprises four distribution network operators serving 7.9 million customers in central and southwest England and south Wales.

Vincent Sorgi, president and CEO of PPL Corp. commented on the transactions.

“The strategic transactions we are announcing today immediately unlock value for shareowners and achieve the objectives we set out in launching the process to sell our U.K. utility business,” said Sorgi. “They will refocus our business mix squarely on strong, rate-regulated U.S. utilities; strengthen our credit metrics; enhance long-term earnings growth and predictability; and provide us with greater financial flexibility to invest in sustainable energy solutions for those we serve.”

Under the terms of the agreements, PPL said it will sell its U.K. subsidiary holding the interests in WPD to National Grid in an all-cash transaction valued at £14.4 billion, including the assumption of approximately £6.6 billion of debt.

The company said the sale is expected to result in net cash proceeds of approximately $10.2 billion, based on a foreign currency exchange rate.

Separately, PPL will acquire Narragansett Electric from National Grid in a transaction valued at $5.3 billion, including the assumption of approximately $1.5 billion of Narragansett Electric’s debt.

PPL said it plans to use a portion of the proceeds from the sale of WPD to National Grid to finance the acquisition.

After the transactions are complete, PPL will have approximately 3.5 million electricity and gas customers in the U.S.

That includes approximately 780,000 customers from Narragansett Electric’s electricity transmission and distribution and gas distribution businesses in Rhode Island.