Eon‘s takeover of Ovo is expected to be completed in the second half of 2026 – Mario Hommes/DeFodi Images
Germany’s Eon is to become Britain’s largest energy supplier after agreeing to a deal to buy struggling rival Ovo.
Eon said on Monday it would take on the home retail business of Ovo, the UK’s fourth-largest gas and electricity supplier.
The takeover will hand Eon an additional four million customers, bringing its total to around 9.6 million and overtaking Octopus to become the country’s largest supplier.
Terms of the deal were not disclosed, though previous reports suggested it could be worth up to £600m.
Stephen Fitzpatrick, a former City trader, founded Ovo in 2009 and grew the business into one of Britain’s largest energy suppliers after acquiring SSE’s retail business for £400m in 2020.
But the company has been beset with financial problems, posting a net loss of £135m in 2024.
It warned last year that a “material uncertainty” clouded its future because it was having difficulty meeting financial resilience targets set by regulator Ofgem.
Mr Fitzpatrick, the founder of Ovo, said: “Energy retail is now more regulated, more capital-intensive and increasingly dependent on long-term investment and scale.
“In that context, bringing Ovo together with Eon is the right next step for customers, for colleagues and for the long-term commitment that decarbonisation requires.”
The company has been struggling for months to secure its future, appointing Rothschild as its bankers to raise hundreds of millions of pounds through new investment or a sale. French energy companies EDF and Engie also held talks about a possible acquisition.
Ovo has also been cutting tens of millions of pounds in costs under a new business plan aimed at securing its survival.
The sale will end Mr Fitzpatrick’s hopes of regaining control of the company he founded after he failed to convince other shareholders of his plans to inject £200m into the business.
The tycoon, who also owns the luxury private members’ club Kensington Roof Gardens, has extracted tens of millions of pounds from Ovo through a licensing deal to use the brand.
It is not clear whether the Ovo brand will continue to exist following the merger. Eon said it was planning a “full integration” of Ovo into its operations.
The combined company will be the largest provider of domestic electricity, covering 28pc of the UK market. However, it will still be only the third-largest provider of domestic gas, covering 23pc of the market, after Octopus and British Gas, which cover 27pc and 25pc respectively.
The deal comes as UK households brace for a fresh increase in energy costs amid the war in Iran, which is driving up oil and gas prices. Average annual energy bills are expected to increase by £280 when Ofgem announces an increase in the energy price cap later this month.
‘Not about scale’
Chris Norbury, the chief executive of Eon UK, said the deal was “not about scale for its own sake”.
He said: “It is about building a retailer with the capability, the technology and the customer base to make new energy work for everyone.
“We chose Ovo because it’s a modern, digitally native business with great people and a shared belief that innovation is what can make energy affordable and sustainable for everyone.”
The takeover is subject to regulatory hurdles, including potential scrutiny from the UK’s competition watchdog, and is expected to be completed in the second half of 2026. The two companies will continue to operate as independent businesses until then.
Ovo has also agreed to sell its home services division, which provides boiler servicing and insurance, to Hometree.
The deal does not include Ovo’s software arm, Kaluza. Eon currently uses rival software Kraken, which was developed by Octopus, but the companies said they would explore adopting Kaluza outside the UK.