SSE buys Irish electricity firm

SSE is set to become Ireland's third biggest electricity company after it announced a multi-million pound takeover of Endesa Ireland.

The company is paying €320m - around £256m - plus an estimated €43m (£34m) for working capital.

SSE will take over four power plants as well as another that is under construction.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Once the deal is done the firm faces a £100m bill to build a combined cycle gas turbine that is already being built at the Great Island power station in County Wexford.

SSE said the acquisition was expected to enhance earnings from the first full year and would improve the risk profile of its business in Ireland. It added that the takeover was consistent with the maintenance of a single A credit rating.

"The completion of this acquisition and of the Phoenix acquisition we announced in May will make SSE the third largest energy company across the island of Ireland and will take our total investment in energy on the island to around €1.7bn," said Chief Financial Officer Gregory Alexander.

"The acquisition will give us substantial and diverse generation assets to help meet the energy needs of our increasing number of customers and give balance to our business in Ireland which will put it on a very strong footing for the long term."

Endesa Ireland's profit before tax in 2011 was €38.1m, while the value of its gross assets, the total of current and non-current assets, was €490.6m.