Octopus Energy is moving to build itself as the biggest energy distributor in the U.K., after buying out a smaller rival, Co-op Energy, which supplies gas and electricity to about 300,000 homes. A letter distributed to the company’s employees on Wednesday details the agreement between the two energy corporations.
Octopus Energy currently has 850,000 customers across the United Kingdom, and the deal is expected to nudge its business to break through the 1M customer threshold. The company is prepared to confirm if the deal has succeeded in reaching one million customers after just four years of operations.
The £30 million-deal is said to propel the company to the direction of overpowering another rival, Bulb Energy, which supplies 1.4 million customers and is the U.K.’s fastest-growing new supplier.
The merger follows a series of deals within the energy industry in recent years, which is beginning to consolidate after a flood of new suppliers joined the market. However, many of these deals have proved that they are unstable and are subject to future buyouts.
Co-Op Energy snapped up 160,000 customers from GB Energy Supply after it collapsed in 2016 and then gained another 130,000 customers after its takeover of Flow Energy last year.
After the series of events that have affected the energy market, Co-Op Energy, part of the Midcounties Co-op, has since been plagued with a series of financial troubles. It revealed deepening losses earlier this year in the Co-op’s financial report. The loss has forced the company to agree for a buyout with Octopus in order to save the company’s bigger businesses.
While also having its own series of losses, Octopus Energy, which is backed by its multimillionaire company owner has moved on with the acquisition in order to position itself for bigger gains in the future amid the owners’ ambitions to grow the business to compete with the big six.