Big Six energy provider SSE has agreed to sell its household supply arm to smaller rival Ovo Group in a £500m deal.

Ovo's planned takeover of SSE's energy services business is expected to complete later this year or early next year.

SSE is the third largest supplier in the UK energy market, with around 3.5m household customers and 8,000 staff.

Ovo is the UK's largest independent energy supplier, with 1.5m customers and about 2,000 employees.

The deal comes after SSE was forced to scrap its merger with Big Six rival npower last December after the Government's energy price cap sent shockwaves through the industry.

Gas and electricity suppliers have come under intense pressure in the UK following this year's introduction of the cap on standard variable tariffs, as well as increasing competition from a swathe of smaller players.

In May, SSE announced plans to offload its energy services segment after more than half a million households switched to a new supplier in the year ending March 2019.

The Big Six company vowed to sell or float its energy services arm by the second half of 2020.

SSE said should the deal with Ovo go through, it will "all it can to ensure a smooth transition for customers and employees".

SSE chief executive Alistair Phillips-Davies said: "We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders - and this is an excellent opportunity to make that happen.

"Ovo shares our relentless focus on customer service and has a bold vision for how technology can reshape the future of the industry.

"I'm confident that this is the best outcome for the SSE Energy Services business."