Centrica plc today announced that its North American subsidiary, Direct Energy, has entered into an agreement to acquire Strategic Energy LLC, a subsidiary of Great Plains Energy Inc. (NYSE: GXP), for a total cash consideration of US$300 million (£151 million). The transaction is debt free and includes a significant amount of working capital which will be subject to a subsequent true-up.
Strategic Energy is one of the United States' largest competitive electricity suppliers to the commercial and industrial (C&I) market with over 26,000 customers across 11 states with revenues of some $2 billion and sales of 21TWh. During the year ending 31 December 2007 it delivered an EBITDA of just over US$23 million. The merger of Strategic Energy with Direct Energy's existing C&I business will create a business supplying almost 55TWh of electricity and gas to customers which will make it a top three supplier of energy to the C&I market in North America and enable the achievement of material synergies.
This acquisition is an excellent fit with Direct Energy's current business both geographically and strategically and enables it to accelerate its growth plans through immediate scale benefits in excess of US$15m per annum, following initial one-off integration costs, and further cross-selling opportunities in a competitive C&I market.
Sam Laidlaw, Chief Executive of Centrica, said: "Acquiring Strategic Energy is in line with our strategy of building on our growth platforms. It immediately strengthens our position in the important North American commercial and industrial market and, together with our recent acquisition of Rockyview Energy, it maintains Centrica's ongoing commitment to growing this important part of our business."
The transaction is subject to regulatory approval and is expected to close in June 2008.