Electricite de France, Europe's biggest power company, has agreed to buy American Electric Power's UK Seeboard unit for 1.39 billion pounds ($2.06 billion) to catch up with rivals in the country.
The French company's UK unit will pay American Electric Power, the biggest US utility owner, 670 million pounds in cash and assume 722 million pounds of debt. It will also take on obligations worth a hundred million pounds.
The purchase brings Electricite de France's UK customer count up to a total of five million. That is estimated as the minimum needed to be profitable in the country, analysts and executives say, as power prices have declined by forty percent there in the past four years.
“It brings EDF the critical mass it wanted,” said Phil Hollobone, an analyst at Societe Generale SA. “But they had to pay up for it.”