E.ON has agreed a deal to acquire OVO Energy in a major shake-up of the UK energy market, with the value of the transaction remaining undisclosed.
The takeover is subject to regulatory approval, which both companies expect to secure during the second half of 2026.
Until the approval process is completed, both suppliers will continue operating independently.
The agreement includes OVO’s retail customer base and all employees supporting those customers.
OVO said the sale followed a review of its strategic options, with the company concluding that joining E.ON would provide the strongest long-term platform for the business and its customers.
The supplier said becoming part of a larger energy group would support continued investment in products and services designed to help households manage energy consumption and adopt low-carbon technology.
OVO has also agreed to sell its Home Services division to Hometree, subject to separate regulatory approval.
The Home Services arm provides boiler servicing and insurance products.
E.ON to acquire OVO Energy in major UK energy market takeover deal
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E.ON said the combined business would help accelerate the transition towards a more flexible and digitally focused energy system.
The company stated: "As the UK energy system evolves, flexibility will be central to keeping costs down and improving resilience.
"A larger, digitally native E.ON UK accelerates the shift to a customer-led energy system, making new energy work for everyone, not just for early adopters."
Following completion of the acquisition, E.ON said it would continue using the existing energy intelligence platform licence agreement with Kaluza for OVO customers.
The technology platform is used to streamline billing systems and speed up product development.
Both companies also said they would explore expanding Kaluza’s use across E.ON operations outside the UK.
OVO founder Stephen Fitzpatrick said the sale reflected major changes across the energy industry since the company was established 16 years ago.
"Sixteen years ago I started OVO with a simple belief: energy should be cheaper, greener and simpler and it should work for customers.
Mr Fitzpatrick said the energy retail sector had become increasingly regulated and dependent on access to long-term investment
| PA/GETTY"That belief built one of the country's largest energy companies and pioneered a completely new customer centric approach."
"Energy retail is now more regulated, more capital intensive and increasingly dependent on long-term investment and scale.
"In that context, bringing OVO together with E.ON is the right next step for customers, for colleagues, and for the long-term commitment that decarbonisation requires."
OVO chair Jayne-Anne Gadhia said the company had spent almost two decades operating as a challenger brand within the energy market.
Dame Jayne-Anne said: "OVO is proud of the role it has played as a challenger brand over the past almost 20 years."
She added: "Supported by our investors, we have powered multiple innovations in products and services for consumers, and pushed forward a greener, more affordable, and more efficient energy system."
Chief executive Chris Houghton said changing market conditions had made scale increasingly important for suppliers navigating the energy transition.
"As the market has evolved, scale and access to significant long-term capital for the energy transition have become non-negotiable.
"Following a thorough review, we believe this decision gives the business the strongest footing for the future."
Mr Houghton said OVO would work closely with E.ON and Hometree to ensure a smooth transition for customers and staff following completion of both transactions.
Emily Seymour, energy editor at consumer group Which?, said: "If you're an Ovo customer, don't panic, your gas and electricity supply will continue as usual.
"E.On have assured customers that existing tariffs will be honoured in full and service will continue unchanged. You don't need to do anything and you're still able to switch supplier if you wish."