National Grid plc (LSE: NG, NYSE: NGG) today announced its agreement to acquire Western Power Distribution, the UK’s largest electricity distribution business, from PPL Corporation (NYSE: PPL) for an equity value of £7.8 billion. In parallel, with PPL wishing to expand its presence in the U.S., National Grid has agreed to PPL acquiring The Narragansett Electric Company, National Grid’s electric and gas business serving customers in Rhode Island, for an equity value of US$3.8 billion (£2.7 billion). National Grid and PPL share a purpose-driven culture and core values, which will enable a seamless transition for colleagues, customers, and communities.
As part of today’s announcement, National Grid has also announced that it will look to sell a majority stake in its National Grid Gas Transmission business in the U.K.
The full announcement detailing the transaction terms is available at nationalgrid.com/investors/repositioningtheportfolio.
Narragansett Electric is the largest electricity transmission and distribution service provider to Rhode Island, as well as a natural gas distributor in the state, serving approximately 780,000 customers. PPL, headquartered in Allentown, Pennsylvania, provides essential energy services to approximately 2.7 million customers. Like Narragansett Electric, PPL is committed to providing safe and reliable service for customers, and PPL is consistently ranked among the best utilities in the regions in which it serves.
Badar Khan, President of National Grid U.S., said:
"We are proud of our Narragansett Electric colleagues and their success in building a strong, responsible business. Narragansett Electric will be joining a team at PPL that remains safety-driven, locally focused, and committed to the communities we serve. We are confident of a seamless transition, uninterrupted service, and ongoing support of our customers and teams.
The U.S. remains the strongest geographic contributor to National Grid’s growth and is a critical driver of our strategy.”
John Pettigrew, Chief Executive of National Grid, said:
“Narragansett Electric has always had a reputation for high performance, and PPL is gaining a world-class operation. Western Power Distribution presented a unique opportunity for National Grid to achieve scale in U.K. electricity distribution, a key component of our strategy to be at the heart of a clean, fair, and affordable energy future. Similarly, Narragansett Electric was a coveted business by PPL. We are pleased that this announcement is enabling two highly motivated operators to connect with two high-quality businesses in furtherance of our respective visions.
National Grid will continue to have a diversified portfolio of assets across the U.K. and U.S. markets.
I want to personally thank our colleagues at Narragansett Electric for their hard work, stellar service to customers, and dedication to providing safe and reliable energy to the communities they serve. We are confident in PPL’s ability to continue operating this business in a manner that serves Narragansett Electric’s communities, customers, and stakeholders well.”
The transactions are conditional upon the approval of National Grid shareholders at a General Meeting. In addition, completion of the Western Power Distribution acquisition and the Narragansett Electric transaction are conditional on regulatory approval, which is expected within 4 months in the case of Western Power Distribution and 9-12 months in the case of Narragansett Electric.
On approval, there will be a Transition Services Agreement to support PPL with timelines to ensure a seamless transition for Rhode Island customers and employees. The majority of Narragansett Electric’s employees will remain with Narragansett Electric as the company transfers ownership to PPL, including all the members of UWUA Local 310, UWUA Local 310B and USW Local 12431.
About National Grid
National Grid (NYSE: NGG) is an electricity, natural gas, and clean energy delivery company serving more than 20 million people through our networks in New York, Massachusetts, and Rhode Island. National Grid is transforming our electricity and natural gas networks with smarter, cleaner, and more resilient energy solutions to meet the goal of reducing greenhouse gas emissions.
Headquartered in Allentown, Pennsylvania, PPL Corporation (NYSE: PPL) is one of the largest companies in the U.S. utility sector. PPL’s seven high-performing, award-winning utilities serve more than 10 million customers in the U.S. and U.K. With more than 12,000 employees, the company is dedicated to providing exceptional customer service and reliability and delivering superior value for shareowners. To learn more, visit www.pplweb.com.
This announcement contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information with respect to National Grid’s financial condition, its results of operations and businesses, strategy, plans and objectives. Words such as 'aims', 'anticipates', 'expects', 'should', 'intends', 'plans', 'believes', 'outlook', 'seeks', 'estimates', 'targets', 'may', 'will', 'continue', 'project' and similar expressions, as well as statements in the future tense, identify forward-looking statements. These forward-looking statements are not guarantees of National Grid’s future performance and are subject to assumptions, risks and uncertainties that could cause actual future results to differ materially from those expressed in or implied by such forward-looking statements. Many of these assumptions, risks and uncertainties relate to factors that are beyond National Grid’s ability to control, predict or estimate precisely, such as the impact of COVID-19 on our operations, our employees, our counterparties, our funding and our regulatory and legal obligations, but also, more widely, changes in laws or regulations, including any arising as a result of the United Kingdom's exit from the European Union, announcements from and decisions by governmental bodies or regulators, including those relating to the RIIO-2 price controls as well as uncertainty around economic recovery following the COVID-19 pandemic; the timing of construction and delivery by third parties of new generation projects requiring connection; breaches of, or changes in, environmental, climate change and health and safety laws or regulations, including breaches or other incidents arising from the potentially harmful nature of its activities; network failure or interruption, the inability to carry out critical non network operations and damage to infrastructure, due to adverse weather conditions including the impact of major storms as well as the results of climate change, due to counterparties being unable to deliver physical commodities, or due to the failure of or unauthorised access to or deliberate breaches of National Grid’s IT systems and supporting technology; failure to adequately forecast and respond to disruptions in energy supply; performance against regulatory targets and standards and against National Grid’s peers with the aim of delivering stakeholder expectations regarding costs and efficiency savings; and customers and counterparties (including financial institutions) failing to perform their obligations to National Grid. Other factors that could cause actual results to differ materially from those described in this announcement include fluctuations in exchange rates, interest rates and commodity price indices; restrictions and conditions (including filing requirements) in National Grid’s borrowing and debt arrangements, funding costs and access to financing; regulatory requirements for National Grid to maintain financial resources in certain parts of its business and restrictions on some subsidiaries' transactions such as paying dividends, lending or levying charges; the delayed timing of recoveries and payments in National Grid’s regulated businesses and whether aspects of its activities are contestable; the funding requirements and performance of National Grid’s pension schemes and other post-retirement benefit schemes; the failure to attract, develop and retain employees with the necessary competencies, including leadership skills, and any significant disputes arising with National Grid’s employees or the breach of laws or regulations by its employees; the failure to respond to market developments, including competition for onshore transmission; the threats and opportunities presented by emerging technology; the failure by National Grid to respond to, or meet its own commitments as a leader in relation to, climate change development activities relating to energy transition, including the integration of distributed energy resources; and the need to grow National Grid’s business to deliver its strategy, as well as incorrect or unforeseen assumptions or conclusions (including unanticipated costs and liabilities) relating to business development activity. For further details regarding these and other assumptions, risks and uncertainties that may impact National Grid, please read the Strategic Report section and the 'Risk factors' on pages 227 to 230 of National Grid’s most recent Annual Report and Accounts as updated by National Grid’s unaudited half-year financial information for the six months ended 30 September 2020 published on 12 November 2020. In addition, new factors emerge from time to time and National Grid cannot assess the potential impact of any such factor on its activities or the extent to which any factor, or combination of factors, may cause actual future results to differ materially from those contained in any forward-looking statement. In relation to the Transactions these forward-looking statements will be qualified by the risk factors described in Part II (Risk Factors) of the shareholder circular which is expected to be published shortly. Except as may be required by law or regulation, National Grid undertakes no obligation to update any of its forward-looking statements, which speak only as of the date of this announcement.