Western Power Distribution (WPD) has been put up for sale by its American owner PPL Corporation as it looks to focus more on the US market.
The decision to sell the DNO was taken after a comprehensive strategic review by PPL’s Board of Directors the company said, announcing the sale alongside its second quarter financial results.
PPL is expecting a variety of offers, including all cash or a combination of cash and U.S. utility assets. Selling WPD now will give the new owner time to influence the company’s business plans for the RIIO-ED2 price period. These need to be filed with Ofgem by mid-2021, ahead of the start of the period in April 2023.
Vincent Sorgi, PPL president and chief executive officer said the sale should “unlock significant value” for the company, helping to strategically reposition its portfolio to be fully US based.
He continued that WPD is a “very strong business” and continues to perform “exceptionally well”, but it is undervalued by the market as part of PPL.
“We believe that greater value can be achieved for PPL shareowners through a sale of the UK business and use of proceeds that would be focused on strengthening PPL’s balance sheet and enhancing the company’s long-term earnings growth, which could include supporting strategic growth opportunities in the US and returning capital to shareowners.
“Ultimately, we believe the divestment of WPD will simplify PPL’s business mix, provide the company greater financial flexibility and create a sharpened focus on building tomorrow’s energy infrastructure and advancing a cleaner energy future in the US,” said Sorgi.
WPD currently serves about 8 million customers across central and southwest England, and south Wales.