At the same time, National Grid will sell Narragansett Electric Company (NECO) to US-based PPL for an equity value of $3.8bn (£2.7bn). NECO is based in Rhode Island, US.
Later this year, National Grid intends to begin the sale of a majority stake in National Grid Gas. This company owns the UK national gas transmission system. National Grid aims start the sale process for NGG in the second half of this year, finishing it approximately one year later.
National Grid chief executive John Pettigrew said: “The acquisition of WPD is a one-off opportunity to acquire a significant scale position in UK electricity distribution. WPD has a high quality, fast growing asset base and an excellent track record of customer satisfaction, operational performance and financial returns.
“We have received a premium valuation for our Rhode Island business and I am confident that we will also deliver attractive shareholder value from the NGG sale in due course.
“In combination with the continued successful execution of our strategy in the US, establishing National Grid as the leading electricity transmission and distribution operator in the UK will strengthen our long-term growth prospects, enhance our role in the UK’s energy transition and drive long-term shareholder value.”
A national grid spokesperson said the company will still have a diversified portfolio of assets in both countries after the sale. After the sales of NECO and stake in NGG, approximately 40% of National Grid assets will be in the US.
The transactions will pivot National Grid’s portfolio in the UK towards electricity and increase the group’s assets in electricity from about 60% to 70%.
Completion of the WPD acquisition will take place within the next four months, with the NECO sale finishing before the end of the first quarter of 2022.