Centrica plc’s North American subsidiary, Direct Energy, has agreed to sell its Ontario home services business to EnerCare (TSX: ECI) for C$550 million
Centrica plc’s North American subsidiary, Direct Energy, has agreed to sell its Ontario home services business to EnerCare (TSX: ECI) for C$550 million (£300 million).
Direct Energy currently has nearly 1.9 million home services contracts in Ontario, to provide a range of plumbing, heating, ventilation, air conditioning and other related services. The majority of customers are served through a joint arrangement, under which EnerCareowns the water heater assets, while Direct Energy provides services and manages the customer relationships. This transaction will combine the two partsof the business into a single entity, wholly-owned and managed by EnerCare, enhancing the overall customer proposition.
Badar Khan, President and CEO of Direct Energy, said: “This is an attractive opportunity to realise value from the Canadian home services business. With our activities in Ontario no longer forming a material part ofthe business, we will focus our attention on opportunities in the United States and Alberta, through a range of innovative products, including combined energy and services offerings.”
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Notes:
• The transaction is subject to customary regulatory approvals and is expected to close in 2014.
• EnerCare will acquire the Direct Energy-branded home and small commercial services business in Ontario. Direct Energy will retain the Airtron services business and other residual services franchises in the Province.
• The C$550 million headline consideration consists of $450 million of cash and $100 million of common equity in EnerCare which is subject to a 12-18 month lockup.
• In 2013, the Ontario home services businesses contributed C$37 million of EBITDA.
• EnerCare will license the Direct Energy brand for a12 month transitional period, after which it will rebrand the acquired business.