News reports in the UK media have suggested that ScottishPower and Scottish and Southern Energy (SSE) are set to merge in a GBP20 billion deal in a bid to ward off overseas suitors.

The London Evening Standard newspaper has reported that the two Scots firms are ‘on the brink’ of agreeing a tie-up, citing senior financial sources in the City of London.

ScottishPower was approached late in 2005 by E.ON of Germany, but a bid of circa GBP11 billion was rejected by ScottishPower’s then CEO Ian Russell. However Mr Russell has since been replaced by Philip Bowman, the former head of drinks group Allied Domecq, who as widely seen as the man likely to engineer a sale of the firm.

The newspaper cited one senior banker as saying: They both know the deal makes a lot of sense and with the departure of Ian Russell, the way is clear for a deal in which Ian Marchant [SSE’s chief executive] will run the enlarged company and for Philip Bowman to become its chairman.