Octopus takeover of Bulb challenged by rival firms

Octopus Energy’s acquisition of collapsed supplier Bulb could face further delays after rival companies challenged the deal in court.

Bulb, which had about 1.6 million customers, collapsed last year as wholesale gas prices soared.

It was rescued by the government and is currently run by UK energy regulator Ofgem.

A deal for Octopus to buy Bulb has been agreed but Eon, British Gas and Scottish Power are opposed.

On Tuesday, the three competing firms filed motions for judicial review in London’s High Court, challenging the government’s decision to clear the acquisition and provide funds to allow Octopus to complete the Bulb purchase.

A judicial review is a type of legal process in which the legality of a government decision can be challenged.

Bulb’s bailout was the largest government bailout since the Royal Bank of Scotland collapsed during the 2008 financial crisis. The government’s official budget planner, the Office for Budget Responsibility (OBR), said support for the company would cost taxpayers around £6.5 billion pounds will cost.

The value of the deal with Octopus Energy has not been made public, but the BBC understands the company paid the government between £100m and £200m. The deal must be approved by the High Court to go through.

Scottish Power’s Stephen Robins KC said in written submissions that the marketing of the Bulb sale was “flawed” and should be redone to allow for alternative bids.

He said Octopus did in fact receive a “cash gift” or “dowry” from the government in connection with the transaction, full details of which its competitors had not seen.

British Gas representative Jonathan Adkin said in the court hearing that there had been “a pathetic lack of transparency” about the terms of the deal.

Meanwhile, attorneys representing Bulb’s administrators have been urging the judge to set a date for the deal to go through, despite pending legal challenges.

Richard Fisher KC, who represents Bulb’s administrators from consultancy Teneo, dismissed Scottish Power’s “highly controversial” version of events and said in written submissions that other energy companies had decided to “walk out” of the sale process.

Judge Anthony Zacaroli said he will decide on Wednesday whether to set a date for the deal to go through.

Octopus said the company “will continue to work hard to resolve this as soon as possible,” while a spokesman for the Department for Business, Energy and Industrial Strategy (BEIS) said it could not comment on the court case.

Bulb was the largest of more than 30 energy companies to collapse last year after a surge in wholesale gas prices.

BEIS reached an agreement with Octopus to purchase Bulb in October, which is expected to close by the end of November.

But the takeover was delayed after Eon, British Gas and Scottish Power raised concerns earlier this month.