The UK power infrastructure client is buying Western Power Distribution, which operates across the south west and Midlands, from US energy giant PPL Corporation.

In a separate transaction, National Grid will also sell its US Rhode Island utility business – The Narragansett Electric Company – to PPL for £2.7bn.

National Grid also said it expected to launch the sale process for National Grid Gas in the second half of this year with the aim of completing the sale a year later.

John Pettigrew, Chief Executive of National Grid, said: “These transactions will be transformational for our UK portfolio.

“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.

“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.”

He added: “As we move our portfolio to higher growth assets, we have taken the decision to sell a majority stake in NGG. Given the strategic nature of its business coupled with its central position in a transition towards a hydrogen economy, it will continue to play a vital role in the UK’s energy system.

“We expect strong interest when the sale process begins, likely to be in the second half of this year.”