Centrica plc has today announced that its subsidiary British Gas Trading Limited has entered into an agreement with PricewaterhouseCoopers, Administrators of Enron Direct Limited (EDL) (in administration) to acquire its energy customer business and certain of its assets for a total consideration of £96.4 million in cash.
EDL is principally engaged in the supply of electricity to commercial customers. The acquisition is expected to be completed simultaneously.
EDL is a subsidiary of Enron Europe Limited (in administration) which is in turn a subsidiary of Enron Corporation, the US parent company. EDL started trading in 1996 and has grown rapidly. Turnover was £190 million for the 10 months to October 2001, up substantially from £97million in EDL’s last full financial year to December 2000 (unaudited).
EDL has 160,000 direct customers with longer term contracts of generally five years duration. Additional customers are served through licensed intermediaries. Operating assets being acquired, principally receivables, have a value estimated at approximately £47 million. Based on Centrica’s current evaluation of EDL’s customer base and balance sheet accounts, the cost per acquired customer associated with this transaction, is estimated at £197 (net of receivables outstanding and other benefits).
Mike Alexander, Managing Director of British Gas Trading, said: “This provides an ideal platform for advancing our plans for the commercial market. These longer term contract customers represent an attractive additional market segment for Centrica, with higher than average usage and annual bills of approximately £1,300, more than five times the average domestic bill.
“This is an important acquisition in view of our aspirations in the small and medium enterprise market. Our commercial electricity base, which currently stands at 170,000 customers, will be almost doubled, bringing us closer to our target of being number one supplier in that market.”
The increase in the volume and flattening of the profile of demand for power will enable Centrica to realise further strategic and financial value from its power stations.
Centrica will also have the opportunity to enhance and fully utilise EDL’s billing, customer care and energy forecasting systems. This will particularly help Centrica to target the half-hourly metered electricity market.