StockMarketWire.com - National Grid has agreed to acquire PPL WPD Investments, the holding company of Western Power Distribution, for an equity value of £7.8 billion.

In addition, National Grid has agreed to sell The Narrangansett Electric Company (NECO) to PPL Energy Holdings for an equity value of US$3.8 billion (£2.7 billion).

Later this year, National Grid will also commence a process for the sale of a majority stake in National Grid Gas, the owner of the national gas transmission system.

Together these transactions will pivot National Grid's UK portfolio towards electricity. The proportion of the Group's assets in electricity will increase from 60% to 70%; strengthen National Grid's long-term growth outlook by ensuring a significant scale position in electricity distribution through the acquisition of WPD; significantly enhance National Grid's central role in the delivery of the UK's net zero targets.

They will also underpin National Grid's 5% to 7% asset growth target for longer, further supporting its updated dividend policy to deliver annual dividend per share growth in line with UK CPIH inflation, while expecting to maintain its current overall strong investment grade credit rating.

Completion of the WPD Aaquisition, which will be funded by fully committed bridge facilities, is expected to occur within the next four months and completion of the NECO Sale is expected to occur before the end of the first quarter of 2022.

National Grid expects to launch the sale process for NGG in the second half of this year and complete the sale approximately a year later.

John Pettigrew, chief executive of National Grid, said: ‘These transactions will be transformational for our UK portfolio. The acquisition of WPD is a one-off opportunity to acquire a significant scale position in UK electricity distribution. WPD has a high quality, fast growing asset base and an excellent track record of customer satisfaction, operational performance and financial returns. We have received a premium valuation for our Rhode Island business and I am confident that we will also deliver attractive shareholder value from the NGG Sale in due course.

‘In combination with the continued successful execution of our strategy in the US, establishing National Grid as the leading electricity transmission and distribution operator in the UK will strengthen our long-term growth prospects, enhance our role in the UK's energy transition and drive long term shareholder value. Following the completion of these transactions, we will continue to have a diversified portfolio of assets across the UK and US, with a strong asset growth profile that will further underpin our dividend policy for the longer term.’



Story provided by StockMarketWire.com