SSE pulls the plug on UK energy retail merger with Innogy

SSE Plc and Innogy SE terminated plans to create the U.K.’s second-biggest utility, the latest sign of pressure on the industry from increasing regulation.

SSE's board decided it was not in the best interest of the company to proceed with the deal to combine its retail business with Innogy's Npower unit after it emerged last month that more cash would be needed in order to obtain an investment grade rating for the combined company. Shares of Innogy and SSE both fell after the announcement.

The deal's collapse forced German utility Innogy to warn that profits this year would be lower than expected. The move reflects wider pressure on energy companies to adapt to quick shifts in both technology and the political landscape, upending the strategies executives set only a few years ago.

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