Shell (SHEL) to Sell Its U.K. & Germany Business to Octopus Energy
Shell plc (SHEL) declared on Sep 1, 2023, that it would sell its home energy business in the U.K. and Germany to British energy supplier Octopus Energy Group. Shell’s executive vice-president Steve Hill stated that the deal followed the announcement during Capital Markets Day to divest Shell’s home energy retail business in Europe. He added that the company was focusing on projects and countries where it believed it could deliver maximum value.
Octopus, headquartered in the U.K., will take on 2 million new home energy and broadband customers with this acquisition. Through this deal, Octopus will have more than 11-million-meter points and over 6.5 million household customers in the U.K. Its clientele in Germany will increase to about 300,000. All Shell energy and broadband customers will be instructed about the next steps after regulatory clearance, ensuring a seamless transition and no disruption to energy supply.
Through its proprietary technology platform, Kraken, Octopus has a proven track record in large-scale customer migrations. Following Centrica's British Gas, which has around 7.5 million retail customers, Octopus will likely become the second-largest home energy supplier in Britain after the acquisition, with about 6.5 million users, per media reports.
Shell and Octopus have signed a memorandum of understanding to explore the possibility of an international partnership. The two companies intend to offer the finest experience to their electric vehicles charging customers, including Shell Recharge and Octopus Electroverse subscribers.
Following regulatory approval, the deal is anticipated to close in the fourth quarter of 2023. Although the deal's financial specifics were not immediately made public, sources previously estimated its worth to be between $50 million and $100 million.
Zacks Rank & Key Picks
Shell is a group of U.S. and Europe-based big energy multinationals with operations across the world. Currently, Shell carries a Zack Rank #3 (Hold).
Some better-ranked players in the energy sector are USA Compression Partners, LP USAC, currently sporting a Zacks Rank #1 (Strong Buy), and Global Partners GLP and Evolution Petroleum Corporation EPM, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
USA Compression Partners is one of the largest independent natural gas compression service providers across the United States in terms of fleet horsepower. USAC has witnessed an upward earnings estimate revision for 2024 in the past 30 days.
Global Partners is a Delaware limited partnership, formed by affiliates of the Slifka family. The partnership owns, controls or has access to one of the largest terminal networks of refined petroleum products in New England. GLP is one of the largest wholesale distributors of distillates. It has witnessed an upward earnings estimate revision for 2024 in the past 30 days.
Evolution Petroleum is an independent energy company. It was formed to acquire and develop oil and gas fields, and apply both conventional and specialized technology to accelerate production, particularly in low-permeability reservoirs. EPM has witnessed an upward earnings estimate revision for 2024 in the past 60 days.
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