Returns in the British energy retail sector have been under pressure over the past few years as companies have struggled with soaring wholesale costs and a cap on prices they can charge customers imposed by regulator Ofgem.
“This agreement follows the announcement during our Capital Markets Day to divest our home energy retail business in Europe,” said Shell Executive Vice-President Steve Hill.
He said the company was focusing on projects and countries where it believed it could deliver the most value.
Shell Energy Retail Limited in the UK and Shell Energy Retail GmbH in Germany provide domestic gas, power and broadband services to about two million customers and operate under the Shell Energy brand.
The acquisition will likely make Octopus the second-largest home energy supplier in Britain with around 6.5 million customers, second only to Centrica's (CNA.L) British Gas which has around 7.5 million retail customers.
Octopus last year acquired rival Bulb, which was one of the largest energy suppliers to collapse in 2021 due to soaring wholesale gas and electricity prices.
"Shell Energy Retail customers should sit tight for now – the deal is expected to complete in the fourth quarter of 2023 following regulatory approval, and they will be contacted at that time," Octopus said in a statement.
Financial details of the deal were not immediately disclosed but sources have previously estimated the value of the deal at $50-100 million.
Shell and Octopus have also signed a memorandum of understanding to explore a potential international partnership over electric vehicles (EV) charging, including for Shell Recharge subscribers, Shell said.
