Energy supplier SSE has announced it will merge the retail side of its business with rival Npower.

SSE, based in Perth, said the new business would be more efficient and could deliver lower prices for customers.

The firms have a combined customer base of 11.5 million across the UK and would be the second largest energy supplier after British Gas.

The new company will be 65.6% owned by SSE shareholders.

Announcing the deal on Wednesday, SSE said it expected the merger to be completed by late 2018 or early 2019.

Tony Keeling, chief operating officer of SSE Retail, said: "We're proud of our track record in customer service and have plenty to build on, but there is a huge amount of competition and we need to do more than ever to compete by providing value for money and excellent experiences for customers.

"We have an exciting opportunity to create a major new independent supplier with a single-minded focus on customers, combining the benefits of scale and experience with the ability to be more agile in our decision-making and to invest in meeting customers' long-term needs.

"This is a new and different model which should leave us well placed to challenge the market, respond to the challenges and capitalise on the opportunities that lie ahead."

SSE said while no decisions on savings had been taken as yet, it is expected there will be "significant synergies" to lower costs for customers.

The firm said: "To the extent that any anticipated synergies result in implications for employees, no final decisions will be taken before any required consultation with employee representative bodies has taken place‎."