National Grid stock price soars 5% from lows after acquiring WPD for $10.9 billion

Shares of National Grid (LON: NG) soared about 5% in today’s trading session after it gapped lower this morning following a takeover of Western Power Distribution (WPD) from PPL Corporation for 7.8 billion pounds ($10.9 billion).

Fundamental analysis: Two transactions announced

The energy company has completed a WPD deal as it looks to shift from gas to electric power. The company also agreed to sell the Narragansett Electric Company (NECO) to PPL for 2.7 billion pounds ($3.8 billion). 

With this deal, the proportion of National Grid’s assets in the electricity industry will go from 60% to 70%. It is important to note that WPD is the biggest power network operator in the UK.

“When we look at the long term, we believe that the pivot that we are making today will enable us to take a much bigger role in the current energy transition,” said National Grid CEO John Pettigrew.

“We expect strong interest when the sale process begins,” Pettigrew said.

National Grid has committed to invest about 10 billion pounds in the network in the next five years, while it will also look to divest its stake in National Grid Gas company.

Technical analysis: Strong rotation higher

National Grid stock price initially gapped about 2% lower and continues to move lower to ultimately print 805.4p – the lowest the stock traded since the pandemic-driven selloff a year ago. However, shares soared to erase early losses and trade about 1% in the green for the day. 

National Grid monthly chart (TradingView)

Overall, shares have soared more than 4% in March after plunging 5.1% in March. The rebound in National Grid stock price was capped by the 100-MMA around 880p to prompt a rotation lower. The last year’s low of 789.2p is the next target for sellers while the 100-MMA will continue to offer resistance. 

Summary

National Grid stock price soared higher on reports that it acquired Western Power Distribution (WPD) from PPL Corporation in a 7.8 billion pounds ($10.9 billion).

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